AGREEMENT AND PLAN OF MERGER

EX-10.1 2 g02725exv10w1.htm EX-10.1 Ex-10.1

Exhibit 10.1

Execution Copy

AGREEMENT AND PLAN OF MERGER

among

TAS HOLDING, INC.

and

TIMCO AVIATION SERVICES, INC.

Dated as of July 31, 2006

TABLE OF CONTENTS


			Page
ARTICLE I THE MERGER				3

	Section 1.01.	The Merger		3
	Section 1.02.	Closing		3
	Section 1.03.	Effective Time		3
	Section 1.04.	Effects of the Merger		3
	Section 1.05.	Certificate of Incorporation; By-laws		3
	Section 1.06.	Directors and Officers		3
	Section 1.07.	Conversion of Securities		4
	Section 1.08.	Treatment of Options, Warrants		4
	Section 1.09.	Dissenting Shares		5
	Section 1.10.	Surrender of Shares; Payment; Stock Transfer Books.		6
	Section 1.11.	Subsequent Actions		8

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY				9

	Section 2.01.	Organization and Qualification; Subsidiaries.		9
	Section 2.02.	Certificate of Incorporation and By-laws		9
	Section 2.03.	Capitalization		9
	Section 2.04.	Authority Relative to the Transactions		10
	Section 2.05.	No Conflict; Required Filings and Consents.		11
	Section 2.06.	SEC Filings; Financial Statements		12
	Section 2.07.	Absence of Certain Changes or Events		13
	Section 2.08.	Absence of Litigation		14
	Section 2.09.	Employee Benefit Plans		14
	Section 2.10.	Property; Title to Assets		16
	Section 2.11.	Taxes		17
	Section 2.12.	Material Contracts		18
	Section 2.13.	Environmental Matters		19
	Section 2.14.	Labor and Employment Matters		20
	Section 2.15.	Permits; Compliance		21
	Section 2.16.	Intellectual Property		21
	Section 2.17.	Insurance		22

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TABLE OF CONTENTS
(continued)


			Page
	Section 2.18.	Opinion of Financial Advisor		22
	Section 2.19.	Brokers		23
	Section 2.20.	Antitakeover Provisions and Rights Agreements.		23
	Section 2.21.	Investment Companies		23
	Section 2.22.	Transactions With Affiliates		23
	Section 2.23.	Certain Business Practices		23

ARTICLE III REPRESENTATIONS AND WARRANTIES OF TAS				24

	Section 3.01.	Corporate Organization		24
	Section 3.02.	Authority Relative to the Transactions		24
	Section 3.03.	No Conflict; Required Filings and Consents		24
	Section 3.04.	Governmental Consents		25
	Section 3.05.	Financing		25
	Section 3.06.	Brokers		25
	Section 3.07.	Interim Operations of TAS		25
	Section 3.08.	Litigation		25
	Section 3.09.	Stock Ownership and Contribution		25

ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER				26

	Section 4.01.	Conduct of Business by the Company Pending the Merger		26
	Section 4.02.	Advice of Changes; Government Filings		29
	Section 4.03.	Tax Matters		30

ARTICLE V ADDITIONAL AGREEMENTS				31

	Section 5.01.	Stockholders’ Meeting		31
	Section 5.02.	Approval of TAS		31
	Section 5.03.	Proxy/Information Statement		32
	Section 5.04.	Merger Without Meeting of Stockholders		33
	Section 5.05.	Access to Information		34
	Section 5.06.	No Solicitation of Transactions		34
	Section 5.07.	Directors’ and Officers’ Indemnification; Insurance.		38
	Section 5.08.	Further Action; Reasonable Best Efforts		39
	Section 5.09.	Public Announcements		40

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TABLE OF CONTENTS
(continued)


			Page
	Section 5.10.	Takeover Statute		40
	Section 5.11.	Financing		40
	Section 5.12.	Disposition of Litigation		40

ARTICLE VI CONDITIONS TO THE MERGER				41

	Section 6.01.	Mutual Conditions to the Merger		41
	Section 6.02.	Conditions to Obligations of TAS		41
	Section 6.03.	Conditions to Obligations of the Company		42

ARTICLE VII TERMINATION, AMENDMENT AND WAIVER				43

	Section 7.01.	Termination		43
	Section 7.02.	Effect of Termination		44
	Section 7.03.	Fees and Expenses		44
	Section 7.04.	Amendment		46
	Section 7.05.	Waiver		46

ARTICLE VIII GENERAL PROVISIONS				46

	Section 8.01.	Non-Survival of Representations and Warranties		46
	Section 8.02.	Company Stock Purchase		46
	Section 8.03.	Notices		47
	Section 8.04.	Certain Definitions		48
	Section 8.05.	Severability		54
	Section 8.06.	Entire Agreement; Assignment		54
	Section 8.07.	Parties in Interest		54
	Section 8.08.	Specific Performance		54
	Section 8.09.	Governing Law		54
	Section 8.10.	Waiver of Jury Trial		55
	Section 8.11.	Headings		55
	Section 8.12.	Counterparts		55
	Section 8.13.	Interpretation		55

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of July 31, 2006 (this “Agreement”), is among TAS HOLDING, INC., a Delaware corporation (“TAS”), and TIMCO AVIATION SERVICES, INC., a Delaware corporation (the “Company”).

WHEREAS, the Board of Directors of TAS, a Special Committee (the “Special Committee”) of the Board of Directors of the Company (with authority delegated by the Board of Directors of the Company, hereinafter the “Company Board”), and the Company Board have each determined that it is in the best interests of their respective stockholders to enter into this Agreement providing for the merger (the “Merger”) of TAS with and into the Company in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), upon the terms and subject to the conditions set forth herein;

WHEREAS, the Special Committee has recommended that the Company Board approve this Agreement and declare its advisability and approve the Merger in accordance with the DGCL, upon the terms and subject to the conditions set forth herein;

WHEREAS, the Boards of Directors of TAS and the Company Board have each approved this Agreement and declared its advisability and approved the Merger in accordance with the DGCL upon the terms and subject to the conditions set forth herein;

WHEREAS, pursuant to a Restructuring Agreement dated as of April 16, 2006 between the Company, TAS and the TAS Stockholders (the “Restructuring Agreement”) the TAS Stockholders acquired from Monroe Capital Advisors LLC indebtedness of the Company in the approximate amount of $18.4 million (the “Monroe Debt”) and amended the terms of the Monroe Debt to decrease the interest rate and fees payable thereunder and to waive certain existing events of default under the Monroe Debt for the benefit of the Company and advanced to the Company additional working capital in the amount of $6.0 million thereunder (the “Term C Loan” and together with the Monroe Debt, the “LJH Debt”), which in turn allowed the Company to amend the terms of its indebtedness to CIT Group/Business Credit, Inc. (the “CIT Debt”) to resolve certain existing events of default and to increase the amount of funding available under that facility;

WHEREAS, TAS and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger;

WHEREAS, capitalized terms not defined in the context in the Section in which they first appear shall have the meanings set forth in Section 8.03.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, TAS and the Company hereby agree as follows:

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ARTICLE I

THE MERGER

SECTION 1.01. The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time (as defined below), TAS shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of TAS shall cease and the Company shall continue as the surviving corporation of the Merger (the “Surviving Corporation”).

SECTION 1.02. Closing.

(a) Location and Time. The closing of the Merger (the “Closing”) shall take place no later than the second Business Day after satisfaction or waiver (as permitted by this Agreement and applicable Law) of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Closing Date) set forth in Article VI (the “Closing Date”), unless another time or date is agreed to in writing by the parties hereto. The Closing shall be held at the offices of Bracewell & Giuliani LLP, 500 N. Akard, Suite 4000, Dallas, Texas 75201, unless another place is agreed to in writing by the parties hereto.

(b) Closing Deliveries. At the Closing, including any Closing contemplated by Section 5.04 of this Agreement, the Company and TAS shall make the following deliveries:

(i) The Company shall deliver to TAS a certificate of the Chief Executive Officer or Chief Operating Officer and the Chief Financial Officer of the Company, certifying that:

(A) the representations and warranties of the Company set forth in this Agreement, disregarding all materiality and Company Material Adverse Effect qualifiers (except as set forth in Section 2.07(b)), are true and correct, in each case as of the date of this Agreement and at and as of the Effective Time, as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event as of such specified date), except for failures to be true and correct which would not, individually or in the aggregate, have a Company Material Adverse Effect and which result, or would reasonably be expected to result, in costs or losses to the Company, together with any costs or losses to the Company referenced in Subsection (B) next following, aggregating in excess of $5 million, in each case determined on the basis of cash out-of-pocket costs to the Company and its Subsidiaries;

(B) the Company has performed in all material respects each of the obligations, and complied in all material respects with each of the agreements and covenants, required to be performed by, or complied with by, it under this Agreement at or prior to the Closing, provided that each of such obligations, agreements and covenants shall be deemed to have been performed in all material respects so long as the costs or losses to the Company arising from any breach of any thereof, or which would reasonably be expected to result in costs or losses to the Company, together with costs or losses to the Company referenced in Subsection (A) above, do not in the aggregate exceed $5 million, in each case determined on the basis of cash out-of-pocket costs to the Company and its Subsidiaries; and

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(ii) The Company shall deliver to TAS an executed original copy of the fairness opinion from Houlihan Lokey Howard & Zukin as described in Section 2.18 that has not been withdrawn.

(iii) The Company shall deliver to TAS an executed original copy of the opinion of Akerman & Senterfitt LLP, counsel to the Company, as to the matters addressed in Sections 2.01(a) and (c), 2.03, 2.04 and 2.05, in form and substance reasonably acceptable to TAS and its counsel.

(iii) TAS shall deliver to the Company a certificate of the Chief Executive Officer of TAS, certifying that:

(A) the representations and warranties of TAS set forth in this Agreement, disregarding all materiality and TAS Material Adverse Effect qualifiers, are true and correct, in each case as of the date of this Agreement and at and as of the Effective Time, as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event as of such specified date), except for failures to be true and correct which would not, individually or in the aggregate, reasonably be expected to have a TAS Material Adverse Effect; and

(B) TAS has performed in all material respects each of the obligations, and complied in all material respects with each of the agreements and covenants, required to be performed by or complied with by it under this Agreement at or prior to the Closing.

SECTION 1.03. Effective Time. At the Closing, the parties shall cause the Merger to be consummated by filing a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware, in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time of such filing of the Certificate of Merger (or such later time as may be agreed by the parties hereto and specified in the Certificate of Merger) being the “Effective Time”).

SECTION 1.04. Effects of the Merger. The Merger shall have the effects set forth in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of the Company and TAS shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of the Company and TAS shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

SECTION 1.05. Certificate of Incorporation; By-laws. At the Effective Time, the Certificate of Incorporation of the Surviving Corporation shall be amended in its entirety to read as set forth in Exhibit A hereto, until thereafter amended in accordance with its terms and applicable Law. At the Effective Time, the By-laws of the Surviving Corporation shall be amended in their entirety to read as set forth in Exhibit B hereto, until thereafter duly amended in accordance with their terms and applicable Law.

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SECTION 1.06. Directors and Officers. The directors of TAS immediately prior to the Effective Time shall, at the Effective Time, become the directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal.

SECTION 1.07. Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of TAS, the Company or the holders of any of the following securities:

(a) each share of common stock, par value $0.001 per share, of the Company (“Company Common Stock”, and such shares, “Shares”) issued and outstanding immediately prior to the Effective Time (other than any Shares to be canceled pursuant to Section 1.07(b) and any Dissenting Shares) shall be canceled and shall be converted automatically into the right to receive $4.00 in cash, without interest (the “Per Share Merger Consideration”);

(b) each Share held in the treasury of the Company and each Share owned by TAS or its stockholders immediately prior to the Effective Time shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto; and

(c) each share of common stock, par value $0.001 per share, of TAS issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock, par value $0.001 per share, of the Surviving Corporation (“Surviving Corporation Shares”).

SECTION 1.08. Treatment of Options, Warrants

(a) Termination. Between the date of this Agreement and the Effective Time, the Company shall take all necessary action (which shall be effective as of the Effective Time) to:

(i) terminate (effective as of the Effective Time) each of the Company’s stock option plans and restricted stock purchase plans, including but not limited to those included on Disclosure Schedule 2.03, and, to the extent that it may legally do so, to terminate each stock option agreement and restricted stock purchase agreement granted otherwise than under such plans, each as amended through the date of this Agreement (collectively, the “Company Stock Plans”); and

(ii) cancel, as of the Effective Time, each outstanding option to purchase Shares of Company Common Stock granted under the Company Stock Plans (each, a “Company Stock Option”) that is outstanding and unexercised, whether or not vested or exercisable, as of such date (in each case, without the creation of additional liability to the Company or any of its Subsidiaries) and each right to purchase Company Stock under any restricted stock purchase plan, to the extent that it may legally do so.

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(b) Treatment of Outstanding Options, Warrants, Conversion Rights.

(i) As of the Effective Time, each holder of a Company Stock Option that is not cancelled by agreement with the Company on or immediately prior to the Effective Time pursuant to Section 1.08(a) shall be entitled to receive from the Surviving Corporation an amount of cash, without interest (the “Option Consideration”), equal to the product of:

(A) the total number of Shares subject to such Company Stock Option, multiplied by

(B) the excess, if any, of the Per Share Merger Consideration over the exercise price per Share of such Company Stock Option (with the aggregate amount of such payment to the holder to be rounded to the nearest cent), less applicable withholding taxes, and upon payment of such amount to the holder of a Company Stock Option, such Company Stock Options will be deemed cancelled and of no further legal effect; provided that with respect to the 47,083 Shares issuable pursuant to the LJH Warrant, (as defined in the Company SEC Reports, the “LJH Warrant”), such payment shall be due upon the conversion of the Company Convertible Debt into Shares in accordance with the terms of the Company Convertible Debt and the LJH Warrant.

(ii) As of the Effective Time, each holder of a warrant or other right to purchase Shares that is not cancelled by agreement with the Company on or immediately prior to the Effective Time pursuant to Section 1.08(a) (a “Company Stock Purchase Right”) having an exercise or purchase price that is less than the Per Share Merger Consideration shall be entitled to receive from the Surviving Corporation an amount of cash, without interest (the “Purchase Right Consideration”), equal to the product of:

(A) the total number of Shares subject to such Company Stock Purchase Right, multiplied by

(B) the excess, if any, of the Per Share Merger Consideration over the exercise price per Share of such Company Stock Purchase Right (with the aggregate amount of such payment to the holder to be rounded to the nearest cent), less applicable withholding taxes, and upon payment of such amount to the holder of a Company Stock Purchase Right, such Company Stock Purchase Right will be deemed cancelled and of no further legal effect.

(iii) As of the Effective Time, each holder of a Company Stock Option that is not cancelled by agreement with the Company on or immediately prior to the Effective Time pursuant to Section 1.08(a) and which has an exercise price per Share that is equal to or greater than the Per Share Merger Consideration shall, as of the Effective Time of the Merger, be entitled to an aggregate payment of $100.00 in cash with respect to all such Company Stock Options held as of the Effective Time, and all such Company Stock Options shall be deemed cancelled and of no further force or effect upon such payment.

(iv) The right to receive Shares upon conversion at maturity pursuant to the Company’s 8% Senior Subordinated Convertible PIK Notes due December 31, 2006 issued pursuant to an Indenture, dated as of February 28, 2002, among TIMCO Aviation Services, Inc., the Trustee and the Subsidiary Guarantors named therein, as amended, and the Company’s 8% Junior Subordinated Convertible PIK Notes due January 1, 2007, issued pursuant to an Indenture, dated as of September 20, 2002, among TIMCO, the Trustee and the Subsidiary

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Guarantors named therein, as amended (together, the “Company Convertible Debt”), will be unchanged by the Merger and will continue to exist pursuant to such Indentures, such that each right to receive a Share pursuant to such Indentures prior to the Merger will after the Merger represent the right to receive one share of common stock, $.001 par value per share, of the Surviving Corporation.

(v) To the extent that the right to receive Shares upon exercise of any Company Stock Option or Company Stock Purchase Right is not extinguished upon the effectiveness of the Merger pursuant to this Section 1.08, each right to receive a Share pursuant to such Company Stock Option or Company Stock Purchase Right prior to the Merger will, after the Merger, represent the right to receive one share of common stock, $.001 par value per share, of the Surviving Corporation.

(c) Consents to Transaction. The Company agrees to use its reasonable best efforts to obtain written agreements from each holder of a Company Stock Option to accept the treatment described in Section 1.08(b) with respect to such Company Stock Option.

SECTION 1.09. Dissenting Shares.

(a) Right. Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by holders of Shares who have not voted in favor of or consented to the Merger and who have properly demanded appraisal for such Shares in accordance with Section 262 of the DGCL (the “Dissenting Shares”) shall not be converted into the right to receive the Per Share Merger Consideration, and the holders thereof shall be entitled to receive the “fair value” of such Shares as provided in Section 262 of the DGCL; provided, however, that if, after the Effective Time, any such stockholder of the Company shall fail to perfect or shall effectively waive, withdraw, or lose such stockholder’s rights under Section 262 of the DGCL, such stockholder’s Shares shall no longer be considered Dissenting Shares for the purposes of this Agreement and shall thereupon be deemed to have been converted, at the Effective Time, into the right to receive the Per Share Merger Consideration without any interest thereon.

(b) Notice of Demand. The Company shall give TAS prompt notice of any notice received by the Company of intent to demand appraisal of any Shares, withdrawals of such notices and any other instruments served pursuant to Section 262 of the DGCL and received by the Company. TAS shall have the right to participate in and to direct all negotiations and proceedings with respect to the exercise of appraisal rights under Section 262 of the DGCL. The Company shall not, except with the prior written consent of TAS or as otherwise required by an order, decree, ruling or injunction of a court of competent jurisdiction, make any payment with respect to any such exercise of appraisal rights or offer to settle or settle any such rights.

SECTION 1.10. Surrender of Shares; Payment; Stock Transfer Books.

(a) Escrow. Pursuant to the Escrow Agreement, dated July 31, 2006, by and among the Company, TAS and American Bank of Texas (the “Escrow Agent”) in the form attached hereto as Exhibit C (the “Escrow Agreement”), TAS has deposited $10,006,524 in cash of its funds from which the Per Share Merger Consideration will be paid.

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(b) Paying Agent. TAS shall on or before the Effective Time designate by written notice to the Company a bank or other financial institution to act as agent (the “Paying Agent”), which Paying Agent shall be reasonably acceptable to the Company, to receive certificates evidencing Company Common Stock and to disburse the Per Share Merger Consideration from the funds held pursuant to the Escrow Agreement and the funds to which holders of Company Stock Options and Company Stock Purchase Rights shall become entitled pursuant to Section 1.07 or Section 1.08, as applicable. Until used for that purpose, the funds shall be invested by the Paying Agent, as jointly directed by TAS and the Company prior to the Effective Time, in obligations of or guaranteed by the United States of America or obligations of an agency of the United States of America which are backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Services Inc. or Standard & Poor’s Corporation, or in deposit accounts, certificates of deposit or banker’s acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks, each of which has a combined capital surplus aggregating more than $500 million (based on the most recent financial statements of the banks which are then publicly available at the Securities and Exchange Commission (the “SEC”) or otherwise), or in mutual funds investing solely in one or more of the foregoing; provided that no such investment or losses thereon shall affect the Per Share Merger Consideration payable to former stockholders of the Company or the Option Consideration or Purchase Right Consideration payable to former holders of Company Stock Options or Company Stock Purchase Rights. The Surviving Corporation shall promptly provide additional funds to the Paying Agent for the benefit of the former holders of Shares (other than TAS and the TAS Stockholders) and former holders of Company Stock Options and Company Stock Purchase Rights in the amount of any such losses to the extent necessary to satisfy the Surviving Corporation’s obligations under this Article I. All interest accrued on funds held pursuant to the Escrow Agreement and by the Paying Agent shall be for the benefit of TAS, prior to the Effective Time, and for the benefit of the Surviving Corporation after the Effective Time, and not for the benefit of any holder of securities of the Company.

(c) Termination of Agreement. Upon any termination of this Agreement in accordance with the provisions of Section 7.01 hereof prior to the Effective Time, the funds held pursuant to the Escrow Agreement and all accrued interest thereon will, subject to the disposition of any claim that the Company may make in writing to TAS in connection with an alleged breach of this Agreement by TAS, be promptly repaid to the TAS Stockholders as provided in the Escrow Agreement and the Company will execute such documentation as is required by the Escrow Agreement or as may be requested by TAS or the Escrow Agent in order to effect the termination of the escrow and return of such funds.

(d) Exchange of Certificates. Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each Person who was, at the Effective Time, a holder of record of Shares entitled to receive the Per Share Merger Consideration pursuant to Section 1.07(a) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates evidencing such Shares (the “Certificates”) shall pass, only upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates pursuant to such letter of transmittal. Upon surrender to the Paying Agent of a Certificate, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be

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required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefore the Per Share Merger Consideration for each Share formerly evidenced by such Certificate, and such Certificate shall then be canceled. No interest shall accrue or be paid on the Per Share Merger Consideration payable upon the surrender of any Certificate for the benefit of the holder of such Certificate. If the payment equal to the Per Share Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered on the stock transfer books of the Company, it shall be a condition of payment that the Certificate so surrendered shall be endorsed properly or otherwise be in proper form for transfer and that the Person requesting such payment shall have paid all transfer and other taxes required by reason of the payment of the Per Share Merger Consideration to a Person other than the registered holder of the Certificate surrendered, or shall have established to the satisfaction of TAS that such taxes either have been paid or are not applicable. If any holder of Shares is unable to surrender such holder’s Certificates because such Certificates have been lost, stolen, mutilated or destroyed, such holder may deliver in lieu thereof an affidavit and indemnity bond in form and substance and with surety reasonably satisfactory to the Surviving Corporation. Comparable procedures shall be established to disburse the Option Consideration and the Purchase Right Consideration.

(e) Delivery; Escheat. At any time following the six months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds which had been made available to the Paying Agent and not disbursed to the persons (including, without limitation, all interest and other income received by the Paying Agent in respect of all funds made available to it) entitled thereto pursuant to this Agreement, and, thereafter, such holders shall look solely to the Surviving Corporation (subject to abandoned property, escheat and other similar laws) with respect to any Per Share Merger Consideration, Option Consideration or Purchase Right Consideration that may be payable upon due surrender of the Certificates held by them or satisfaction of the other requirements set forth in this Agreement. Notwithstanding the foregoing, neither the Surviving Corporation, TAS nor the Paying Agent shall be liable to any person for any Per Share Merger Consideration, Option Consideration or Purchase Right Consideration delivered in respect of such Share to a public official pursuant to any abandoned property, escheat or other similar Law. Any such amounts remaining unclaimed two years after the Effective Time (or such earlier date, immediately prior to such time when the amounts would otherwise escheat to or become property of any Governmental Authority) shall become, to the extent permitted by applicable Law, the property of the Surviving Corporation free and clear of any claims or interest of any Person previously entitled thereto.

(f) Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided herein or by applicable Law.

(g) Satisfaction. All Per Share Merger Consideration paid upon the surrender for exchange of Certificates, all Option Consideration paid in respect of Company Stock Options and all Purchase Right Consideration paid in respect of Company Stock Purchase Rights, in each case in accordance with the terms of this Article I, shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares theretofore represented by such Certificates,

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Company Stock Options or Company Stock Purchase Rights, as applicable. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent for any reason, they shall be canceled and exchanged as provided in this Article I, except as otherwise provided by Law.

(h) Tax Deduction; Withholding. Each of the Surviving Corporation, the Paying Agent or TAS shall be entitled to deduct and withhold from any amounts otherwise payable hereunder to any Person such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of Federal, state, local or foreign tax Law. To the extent that amounts are so deducted and withheld, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

(i) Adjustment of Merger Consideration. Notwithstanding anything in this Agreement to the contrary, but subject to Section 4.01, if, between the date of this Agreement and the Effective Time, the issued and outstanding Shares shall have been changed into a different number of shares or a different class by reason of any stock split, reverse stock split, stock dividend, reclassification, redenomination, recapitalization, split-up, combination, exchange of shares or other similar transaction, the Per Share Merger Consideration, the Option Consideration and the Purchase Right Consideration and any other dependent items shall be appropriately adjusted to provide to the holders of Company Common Stock or rights to acquire such Company Common Stock and the parties hereto the same economic effect as contemplated by this Agreement prior to such action and as so adjusted shall, from and after the date of such event, be the Per Share Merger Consideration, the Option Consideration and the Purchase Right Consideration or other dependent item, subject to further adjustment in accordance with this sentence.

SECTION 1.11. Subsequent Actions. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Company or TAS acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of either the Company or TAS, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to TAS, except as set forth on the applicable portion of the disclosure schedule delivered by the Company to TAS (the “Company Disclosure Schedule”), that

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SECTION 2.01. Organization and Qualification; Subsidiaries.

(a) Organization. Each of the Company and each Subsidiary of the Company is a corporation or other form of legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. Each of the Company and each of its Subsidiaries is duly qualified or licensed as a foreign corporation or other form of legal entity to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed or in good standing that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(b) Subsidiaries. All of the capital stock of, or other equity interests in, each Subsidiary of the Company are owned by the Company, directly or through one or more directly or indirectly wholly owned Subsidiaries of the Company, free and clear of all encumbrances or other restrictions (other than restrictions under applicable securities laws and pledges of such securities pursuant to the CIT Debt and LJH Debt). All of the capital stock or other equity interests in each such Subsidiary are validly issued, fully paid and nonassessable. The Company does not own or have any right to acquire any ownership interest in, or debt or equity security of, any Person.

(c) Power. Each of the Company and each of its Subsidiaries has the requisite power and authority as a corporation or other legal entity in all material respects to own, lease and operate its properties and to carry on its respective businesses as they are now being conducted.

SECTION 2.02. Certificate of Incorporation and By-laws. The Company has heretofore furnished or made available to TAS a complete and correct copy of the Certificate of Incorporation and the By-laws or equivalent organizational documents, each as amended to date, of the Company and any of its Subsidiaries which TAS has requested be delivered to it. All certificates of incorporation, By-laws or equivalent organizational documents of the Company and its Subsidiaries are in full force and effect.

SECTION 2.03. Capitalization.

(a) Authorized Stock. The authorized capital stock of the Company consists of 101,000,000 shares, of which 100,000,000 are designated as Common Stock and 1,000,000 are designated as Preferred Stock. As of the date of this Agreement, 21,441,040 Shares are issued and outstanding, all of which are validly issued, fully paid and nonassessable and none are held in treasury. Except as set forth in Section 2.03 of the Company Disclosure Schedule, which Schedule sets forth the name of the holder of each option, warrant or other right to purchase capital stock of the Company, the number of Shares that may be purchased by such holder and the price per Share at which such Shares may be purchased, there are (i) no options, warrants, agreements, or other arrangements of any character that are binding on the Company or any of its Subsidiaries that obligate the Company or any of its Subsidiaries to issue, sell, redeem, repurchase or exchange any shares of capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any interest convertible into or exchangeable or exercisable for any

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such capital stock or other equity interests, (ii) no voting trusts, proxies or other similar agreements or understandings to which the Company or any of its Subsidiaries is bound with respect to the voting of any such capital stock or other equity interests, (iii) no contractual obligations or commitments restricting the transfer of, or requiring the registration for sale of, any such capital stock or other equity interests and (iv) no bonds, debentures, notes or other indebtedness having the right to vote on any matters on which shareholders of the Company may vote (whether or not dependent on conversion or other triggering event). The Company Common Stock is not subject to statutory preemptive rights.

(b) Stock Plans. The Company has made available to TAS accurate and complete copies of all Company Stock Plans pursuant to which the Company has granted the Company Stock Options that are currently outstanding. All Shares subject to issuance prior to the Closing as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable.

SECTION 2.04. Authority Relative to the Transactions. The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery by the Company of this Agreement and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Transactions (other than, with respect to the Merger, the approval and adoption of this Agreement and the Merger by the holders of a majority of the then outstanding shares of Company Common Stock (the “Company Stockholder Approval”), if necessary, and the filing and recordation of the certificate of merger as required by the DGCL). The approval and adoption of this Agreement and the Merger by the holders of a majority of the then outstanding shares of Company Common Stock and the filing and recordation of the certificate of merger as required by the DGCL are the only actions required under the DGCL and applicable Delaware Law to authorize the Merger. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all Laws relating to fraudulent transfers), reorganization, moratorium or similar Laws affecting creditors’ rights generally and subject to the effect of general principles of equity (regardless of whether considered in a proceeding at Law or in equity). The Company Board, at a meeting duly called and held, and acting in accordance with the unanimous recommendation of the Special Committee, has:

(a) determined that this Agreement and the Merger contemplated hereby as well as the Company Stock Purchase. and any additional agreements entered into pursuant to the same (collectively, the “Transactions”) are fair to, and in the best interests of, the Company and the holders of Shares (other than TAS and the TAS Stockholders);

(b) approved, adopted and declared advisable this Agreement and the Transactions (such approval and adoption having been made in accordance with the DGCL and the Company’s Certificate of Incorporation); and

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(c) resolved, subject to Section 5.06(d), to recommend that the holders of Shares approve and adopt this Agreement and the Merger (the “Company Recommendation”).

SECTION 2.05. No Conflict; Required Filings and Consents.

(a) No Conflict. The execution and delivery by the Company of this Agreement do not, and the performance by the Company of this Agreement and the consummation of the Transactions by the Company do not and will not:

(i) violate the Certificate of Incorporation or By-laws or any equivalent organizational documents of the Company or any of its Subsidiaries;

(ii) violate any United States or non-United States statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order (“Law”) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected; or

(iii) except as set forth on Section 2.05 of the Company Disclosure Schedules, result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, require consent of or notification to any counterparty under, or result in the creation of a lien or other encumbrance on any property or asset of the Company or any of its Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any property or asset of any of them is bound or affected, except for any such conflicts, violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or with respect to agreements for which consents have been obtained.

(b) Government Approval. The execution, delivery, and performance of this Agreement by the Company and the consummation of the Transactions by the Company do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any government, any instrumentality, subdivision, court, administrative agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority (a “Governmental Authority”), except for (i) those required under or in relation to (A) the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), (B) compliance with the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (C) the DGCL with respect to the filing of the Certificate of Merger and (D) rules such as may be required under any applicable state securities or blue sky laws and (ii) such other consents, permits, approvals, orders or authorizations the failure of which to obtain which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

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SECTION 2.06. SEC Filings; Financial Statements.

(a) Company SEC Reports. The Company has filed or furnished, as the case may be, all forms, reports, registration statements and other documents required to be filed or furnished by it with the SEC since December 31, 2004, and has heretofore made available to TAS:

(i) its Annual Reports on Form 10-K, as amended, for the fiscal years ended December 31, 2003, December 31, 2004 and December 31, 2005, respectively;

(ii) its Quarterly Reports on Form 10-Q for the period ended March 31, 2006;

(iii) all proxy statements relating to the Company’s meetings of stockholders (whether annual or special) held since December 31, 2004; and

(iv) all other forms, reports, registration statements and other documents filed by the Company with the SEC since December 31, 2004 and prior to the Effective Time.

(The forms, reports, registration statements and other documents referred to in clauses (i), (ii), (iii) and (iv) above are collectively referred to herein as the “Company SEC Reports”.) The Company SEC Reports were prepared in accordance with the applicable requirements of the Exchange Act and the Securities Act, and the rules and regulations promulgated thereunder. The Company SEC Reports, as of their respective dates (and, in the case of any Company SEC Report that is a registration statement, as of the date such registration statement became effective), did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All Company SEC Reports, as of their respective dates, complied as to form in all material respects with the applicable requirements of the Exchange Act and the Securities Act and the rules and regulations promulgated thereunder. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received by the Company from the SEC staff with respect to the SEC Reports. None of the Company’s Subsidiaries are reporting companies under the Securities Act or the Exchange Act.

(b) Financial Statements. Each of the audited consolidated financial statements (including, in each case, any notes thereto) contained in the Company SEC Reports was prepared in accordance with United States generally accepted accounting principles in effect as of the date of such financial statements (“GAAP”) applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and each fairly presents, in all material respects, the consolidated financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein. Each of the unaudited interim consolidated financial statements (including, in each case, any notes thereto) contained in the Company SEC Reports was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and each fairly presents, in all material respects, the consolidated financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein (subject to normal period-end adjustments which, individually or in the aggregate, were not and will not be material (or, in the case of such interim

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consolidated financial statements for periods ending prior to April 1, 2006, to the Company’s Knowledge were not, individually or in the aggregate, material)).

(c) Sarbanes-Oxley Act. Since the adoption of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Company has been and is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the related rules and regulations promulgated thereunder and under the Exchange Act that are applicable to it.

(d) Liabilities. Except for any liabilities or obligations disclosed in the Company SEC Reports and liabilities not disclosed therein but which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries has any liability or obligation (whether known, unknown, accrued, absolute, contingent or otherwise):

(i) except to the extent reflected, reserved for or disclosed in the consolidated balance sheet of the Company and its consolidated subsidiaries as at December 31, 2005, as set forth in the Company’s 2005 10-K; or

(ii) that were incurred in the ordinary course of business consistent with past practice since December 31, 2005.

SECTION 2.07. Absence of Certain Changes or Events. Since March 31, 2006, except as set forth in Section 2.07 of the Company Disclosure Schedule or in the Company SEC Reports, or as expressly contemplated by this Agreement:

(a) the Company and the Subsidiaries have conducted their businesses only in the ordinary course and in a manner consistent with past practice;

(b) there has not been any event, circumstance, change or effect that, individually or in the aggregate, has had, or would reasonably be expected to have, a Company Material Adverse Effect;

(c) except in the ordinary course of business or as disclosed hereunder, there has not been any material increase in the compensation payable or which could become payable by the Company and its Subsidiaries to their officers or key employees, or any amendment of any compensation and benefit plans resulting in a material increase in payments thereunder;

(d) there has not been any issuance or agreement to issue shares of Company Common Stock, other than to the Company’s directors pursuant to the Company’s option plan applicable to them;

(e) any material change in financial or tax accounting methods, principles or practices by the Company or any of its Subsidiaries except insofar as may have been required by a change in GAAP or Law and have been disclosed in Company SEC Reports;

(f) any material Tax election by the Company or any of its Subsidiaries or settlement or compromise by the Company or any of its Subsidiaries of any material Tax liability or refund; and

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(g) none of the Company or any of its Subsidiaries has taken any action that, if taken after the date of this Agreement, would constitute a material breach of, or require a consent under, any of the covenants set forth in Section 4.01.

SECTION 2.08. Absence of Litigation. Except as set forth in the Company SEC Reports or in Section 2.08 of the Company Disclosure Schedule, there is no litigation, suit, claim, action, proceeding, arbitration or investigation (an “Action”), or any judgments, decrees, injunctions, rules or orders of any Governmental Authority pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, or any property or asset of the Company or any of its Subsidiaries, except for any of the foregoing that if decided adversely to the Company or its Subsidiaries would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

SECTION 2.09. Employee Benefit Plans.

(a) Plans. Except as set forth in Section 2.09(a) of the Company Disclosure Schedule, the Company does not have any material employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) which are not disclosed in the Company SEC Reports or any bonus, stock option, stock purchase, restricted stock, phantom stock or other equity based compensation incentive, deferred compensation, excess benefit, retiree medical or life insurance, supplemental retirement, severance, salary continuation, pension, profit sharing, savings, retirement, disability, insurance, Section 125 “cafeteria” or “flexible” benefit, vacation, sick leave, employee loan, educational assistance, change in control, termination or any other similar fringe or employee benefit plans, programs or arrangements, or any employment, retention, termination, severance or other contracts or agreements, that cover any of the current or former employees, officers, or directors of the Company or any of its Subsidiaries and with respect to which the Company or any of its Subsidiaries has any material liability or obligation or which are maintained, contributed to or sponsored by the Company or any of its Subsidiaries (collectively, the “Plans”). Neither the Company, nor any employer that would be considered a single employer with the Company under Sections 414(b), (c), (m) or (o) of the Code, contributes, nor within the six-year period ending on the date hereof has any of them contributed or been obligated to contribute, to any plan, program or agreement which is a “multiemployer plan” (as defined in Section 3(37) of ERISA), which is subject to Section 412 of the Code or Section 302 or Title IV of ERISA, or which is maintained outside the jurisdiction of the United States. Except as set forth in Section 2.09(a) of the Company Disclosure Schedule, no Plan provides or permits the provision of, medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Company or any of its Subsidiaries for periods extending beyond their retirement or other termination of service, except as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the regulations thereunder (“COBRA”) or other applicable Law, and at the sole expense of the employee or former employee. The Company may amend or terminate any Plan (other than an employment agreement or any similar agreement that cannot be terminated without the consent of the other party) at any time without incurring material liability thereunder, other than in respect of accrued and vested obligations and medical or welfare claims incurred prior to such amendment or termination. The Company has no plan, contract or commitment, whether legally binding or not,

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to create any additional employee benefit or compensation plans, policies or arrangements or, except as may be required by Law, to modify any Plan.

(b) Plan Compliance. Each Plan has been maintained, operated and administered in material compliance with its terms and the requirements of all applicable Laws including, without limitation, ERISA and the Code. The Company and the Subsidiaries have performed, in all material respects, all obligations required to be performed by them under, are not in any material respect in default under or in violation of, and to the Company’s Knowledge, no other party is in default or violation of, any Plan, and there are no pending or, to the Company’s Knowledge, threatened claims, lawsuits or arbitrations (other than routine claims for benefits), relating to any of the Plans, or the assets of any trust for any Plan. With respect to each Plan, the Company has complied in all material respects with the applicable health care continuation and notice provisions of COBRA and the applicable requirements of the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations thereunder (“HIPAA”), including, but not limited to, the applicable requirements concerning the privacy, security, and/or electronic transmission of health information. Neither the Company or any of its Subsidiaries nor, to the Company’s Knowledge, any of their respective directors, officers, employees or agents has, with respect to any Plan, engaged in or been a party to any “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA), which could result in the imposition of either a penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, in each case applicable to the Company or any of its Subsidiaries or any Plan.

(c) Payments. There will be no material payment, accrual of additional benefits, acceleration of payments or vesting of any benefit under any contract, agreement, plan or other arrangement, whether or not a Plan, and no employee, officer or director of the Company or any of the Subsidiaries will become entitled to any severance, termination pay or similar payments or benefits in connection with the Transactions (either alone or in combination with any other event), other than as specifically provided for in this Agreement and set forth on Section 2.09(c) of the Company Disclosure Schedule. No payment, accrual of additional benefits, acceleration of payments or vesting of any benefit under this Agreement, any Plan or similar agreement or arrangement between the Company or any of its Affiliates and any “disqualified individual” (as such term is defined in Section 280G of the Code) could constitute an “excess parachute payment” (as such term is defined in Section 280G of the Code) in connection with the transactions contemplated by this Agreement (either alone or in combination with any other event) except as set forth on Section 2.09(e) of the Company Disclosure Schedules, and any such payment, accrual or acceleration has been waived by the “disqualified individual.”. No amounts payable under any Plan or otherwise will fail to be deductible to the Company, the Surviving Corporation or their Subsidiaries for federal income tax purposes by virtue of Section 162(m).

(d) Contributions. All contributions, premiums or payments required to be made with respect to any Plan have been made on or before their due dates, with such exceptions as would not have a Company Material Adverse Effect. All liabilities or expenses of the Company or its Subsidiaries in respect of any Plan (including workers compensation) which have not been paid, have been properly accrued on the Company’s most recent financial statements in compliance with GAAP.

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(e) Plan Actions. Prior to the date of this Agreement, for each Company Stock Plan, the committee of the Company Board or other body authorized to administer and interpret such Company Stock Plan has made the determination and directed, in each case in accordance with the terms of such Company Stock Plan, that the Company Stock Options shall be treated as set forth in Section 1.08(a) and Section 1.08(b) of this Agreement.

SECTION 2.10. Property; Title to Assets.

(a) Owned Real Property. The Company and its Subsidiaries do not own any real property or fee simple interest in real property having a value, in the aggregate, in excess of $5,000,000.

(b) Leases. Section 2.10(b) of the Company Disclosure Schedule lists each lease, sublease or license for each parcel of real property currently leased, subleased or licensed by the Company or any of its Subsidiaries (the “Material Leased Real Property”) which requires annual lease payments in excess of $1 million, true and correct copies of which, together with any assignments, guaranties and amendments, have been made available to TAS. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, all such current leases, subleases and licenses relating to Material Leased Real Property are in full force and effect, are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default or event of default (or event which, with notice or lapse of time, or both, would constitute a default) by the Company or any of its Subsidiaries or, to the Company’s Knowledge, by the other party to such lease, sublease or license.

(c) Liens. Except as disclosed in Section 2.10(a) or 2.10(b) of the Company Disclosure Schedule, the Company and the Subsidiaries own or have valid leasehold fee interests in each of their respective properties and assets having a fair value of more than $1 million, free and clear of all encumbrances except for defects in title, easements, encroachments, restrictive covenants and similar encumbrances or impediments that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any agreement or option to purchase any real property or interest therein other than options for renewal of Material Leased Real Property for the benefit of the Company or its applicable Subsidiary.

(d) Entire Interest. Except as set forth in Section 2.10(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has vacated or abandoned any portion of the Material Leased Real Property or given notice to any third party of their intent to do the same.

(e) Condemnation. Except as set forth on Section 2.10(e) of the Company Disclosure Schedule, neither the Company nor any applicable Subsidiary of the Company has received written notice of an expropriation or condemnation proceeding pending, threatened or proposed against the Material Leased Real Property.

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SECTION 2.11. Taxes

(a) Tax Returns. The Company and its Subsidiaries have properly prepared and timely filed (or caused to be timely filed) all material Tax Returns required to be filed by or with respect to them and have fully and timely paid and discharged, or adequately provided for in the financial statements included in the Company SEC Reports, all material Taxes required to be paid or discharged (whether or not shown on such Tax Returns) and have made adequate provision for any taxes that are not yet due and payable for all taxable periods, or portions thereof, ending on or before the date of this Agreement. Except as set forth in Section 2.11(a) of the Company Disclosure Schedule, all such Tax Returns (including information provided therewith or with respect thereto) are true, correct and complete in all material respects. Neither the Company nor any of its Subsidiaries has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any Tax for any taxable period and no request for any such waiver or extension is currently pending. All amounts of Taxes required to be withheld by or with respect to the Company or any of its Subsidiaries have been timely withheld and remitted in all material respects to the applicable Governmental Authority. The Company and its Subsidiaries have each complied in all material respects with all Tax information reporting provisions under applicable laws. Except as set forth in Section 2.11(a) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to any indemnification, allocation or sharing agreement with respect to Taxes or has any liability for Taxes of any Person (other than members of the affiliated group, within the meaning of Section 1504(a) of the Code, filing consolidated federal income tax returns of which the Company is the common parent) under Treasury Regulation Section 1.1502-6, Treasury Regulation Section 1.1502-78 or any similar state, local or foreign Laws, as a transferee or successor, or otherwise. The Company and its Subsidiaries have made available to TAS correct and complete copies of all material Tax Returns, examination reports and statements of deficiencies for taxable periods, or transactions consummated, for which the applicable statutory periods of limitations have not expired.

(b) Audits. There are no pending or, to the Knowledge of the Company, threatened in writing, audits, examinations, investigations or other proceedings in respect of any Tax matter of the Company or any of its Subsidiaries. No Governmental Authority has given notice of its intention to assert any deficiency or claim for additional Taxes against the Company or any of its Subsidiaries. All material deficiencies for Taxes asserted or assessed against the Company or any of its Subsidiaries have been fully and timely paid, settled or properly reflected in the most recent financial statements contained in the Company SEC Reports.

(c) Tax Liens. There are no Tax liens upon any property or assets of the Company or any of the Subsidiaries except for statutory liens for current Taxes not yet due and payable and for such liens, which individually or in the aggregate, would not exceed $500,000.

(d) Section 355. Neither the Company nor any of its Subsidiaries has constituted a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of shares qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.

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(e) Tax Adjustments. Except as set forth in Section 2.11(e) of the Company Disclosure Schedule, there are no adjustments of Taxes of the Company or any of its Subsidiaries made by the IRS which are required to be reported to any state, local, or foreign Taxing authorities that have not been so reported.

(f) Closing Agreements. Neither the Company nor any of its Subsidiaries has executed or entered into a closing agreement under Section 7121 of the Code or any similar provision of state, local or foreign Laws, and neither the Company nor any of its Subsidiaries is subject to any private letter ruling of the Internal Revenue Service or comparable ruling of any other taxing authority.

(g) Employee Remuneration. There is no Contract, plan or arrangement covering any Person that, individually or in the aggregate, could give rise to the payment of any amount that would not be deductible by TAS, the Company or any of their respective Subsidiaries by reason of Section 162(m) of the Code.

(h) Reportable Transactions. Neither the Company nor any of its Subsidiaries has entered into any transaction that constitutes (i) a “reportable transaction” within the meaning of Treasury Regulation § 1.6011-4(b), (ii) a “confidential tax shelter” within the meaning of Treasury Regulation § 301.6111-2(a)(2) or a “potentially abusive tax shelter” within the meaning of Treasury Regulation § 301.6112-1(b).

SECTION 2.12. Material Contracts.

(a) List of Contracts: Section 2.12(a) of the Company Disclosure Schedule sets forth a true and complete list of each material contract and agreement of the following types to which the Company or any of its Subsidiaries is a party or is bound by, or to which any of the assets of the Company or its Subsidiaries are subject (such contracts and agreements as are required to be set forth in Section 2.12(a) of the Company Disclosure Schedule and as are disclosed in the Company SEC Reports being the “Material Contracts”):

(i) all “material contracts” (as such term is defined in Item 601 (b)(10) of Regulation S-K of the SEC) with respect to the Company and its Subsidiaries that are not disclosed in the Company SEC Reports;

(ii) all material contracts and agreements relating to issuances of securities of the Company or any of its Subsidiaries (and all letters of intent, term sheets and draft agreements relating to any such pending transactions);

(iii) all material contracts and agreements relating to indebtedness for borrowed money or capitalized lease obligations, in each case for which the Company or any of its Subsidiaries is primarily or secondarily liable, or which are secured by assets of the Company or any of its Subsidiaries, and in each case in an amount in excess of $1,000,000 that are not disclosed in the Company SEC Reports;

(iv) all material contracts and agreements (A) containing any non-compete covenant or other covenant limiting the right of the Company or any of its Affiliates (or, after the Effective Time, TAS or its Affiliates) to engage in any line of business or to make use of any Intellectual

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Property Rights or (B) containing any material exclusive or sole supplier arrangement, or other exclusive business arrangement, to which the Company or any of its Affiliates is (or, after the Effective Time, TAS or its Affiliates would be) subject;

(v) material lease agreements relating to leased facilities of the Company and its Subsidiaries located in Greensboro, NC, Lake City FL, Oscoda MI, Macon GA and Pacoima CA;

(vi) material contracts and agreements between any of the Company and its Subsidiaries and Boeing and Airbus or their Affiliates;

(vii) material contracts and agreements between the Company and its Subsidiaries and Delta Airlines, Inc., United Air Lines, America West Airlines/U.S. Airways and Federal Express;

(viii) all other material contracts and agreements providing for payments by or to the Company or any of its Subsidiaries, or the guarantee (whether or not contingent) by the Company or any of its Subsidiaries of obligations of any third party, in excess of $1,000,000 and not made in the ordinary course of business, or which are otherwise material to the Company or any of its Subsidiaries or the conduct of its and their respective businesses, or the absence of which would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(b) Validity; Default.

(i) Each Material Contract is valid and in full force and effect and enforceable against the Company or its applicable Subsidiary and against each other party thereto, in accordance with its terms; and

(ii) (A) neither the execution of this Agreement nor the consummation of the Merger shall constitute a default under, give rise to cancellation rights under, or otherwise adversely affect, in each case, in any material respect, any of the rights of the Company or any of its Subsidiaries under any Material Contract, and (B) except as would not have, in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any other party thereto, is in breach of, or default under, any Material Contract to which it is a party nor, to the Knowledge of the Company, has any event occurred that, with notice or lapse of time or both, would constitute such a breach or default, or permit termination, modification or acceleration of any party’s rights under any Material Contract.

The Company has furnished or made available to TAS true and complete copies of all Material Contracts, including any amendments thereto.

SECTION 2.13. Environmental Matters.

(a) Except as set forth in the Company SEC Reports or in Section 2.13(a) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has since January 1, 2003 received any written notice, demand, letter, claim or request for information alleging violation of or liability under any Environmental Law on the part of the Company or any of its Subsidiaries. Except as set forth in Section 2.13(a) of the Company Disclosure Schedule,

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there are no proceedings, actions, orders, decrees, investigations, injunctions or other claims pending, or to the Knowledge of the Company, threatened, relating to or otherwise alleging liability under any Environmental Law or relating to the exposure of any person to hazardous substances.

(b) Except as would not, individually or in the aggregate, reasonably be expected to result, in a Company Material Adverse Effect:

(i) The Company and each of its Subsidiaries are and have been since January 1, 2003 in compliance with all applicable Environmental Laws.

(ii) There are no past or present actions, activities, circumstances, conditions, events or incidents that are reasonably likely to prevent future compliance with Environmental Laws or that have resulted in liability or are reasonably likely to result in liability under Environmental Laws.

(iii) Neither the Company nor any of its Subsidiaries has assumed, either contractually or by operation of law, any liability of any other Person pursuant to Environmental Laws.

(c) The Company has made available to TAS true, complete and correct copies and results of any reports, studies, analyses, tests or monitoring in the possession or control of the Company or any of its Subsidiaries that pertain to material environmental contamination in, on, beneath or adjacent to any property currently or formerly owned, operated, occupied or leased by the Company or any of its Subsidiaries, or regarding the Company’s or any of its Subsidiaries’ compliance with applicable Environmental Laws.

SECTION 2.14. Labor and Employment Matters.

(a) (i) Neither the Company nor any of its Subsidiaries has entered into, is a party to or is bound by any express or implied collective bargaining agreements or other agreement, contract, commitment, arrangement or understanding with any labor union or labor organization, and (ii) no union or other labor organization campaign is pending, or to the Knowledge of the Company has since January 1, 2005 been threatened, with respect to the employees of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is currently, nor has any of them since January 1, 2003 been, the subject of any strike, dispute, walk-out, work stoppage, slowdown or other organized labor dispute involving the Company or any of its Subsidiaries, nor, to the Knowledge of the Company, is any such activity threatened.

(b) Except as would not, in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) each of the Company and each of its Subsidiaries has complied with all Laws relating to the employment and safety of labor, including without limitation the National Labor Relations Act and other provisions relating to wages, hours, benefits, collective bargaining, employment of minors, withholding, immigration and all applicable occupational safety and health acts and Laws, (ii) neither the Company nor any of its Subsidiaries has engaged in any unfair labor practice or discriminated on the basis of race, age, sex, disability or any other protected category in its employment conditions or practices with respect to its employees, customers or suppliers, and (iii) no action, suit, complaint, charge, grievance, arbitration, employee proceeding or investigation by or before any Governmental Authority brought by or on

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behalf of any employee, prospective employee, former employee, retired employee, labor organization or other representative of the Company’s and its Subsidiaries’ employees is pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries which claim damages in excess of $250,000, except as disclosed in Section 2.14(b) of the Company Disclosure Schedule. Except as disclosed in Section 2.14(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to or otherwise bound by any consent decree with or citation by any Governmental Authority relating to the Company’s or its Subsidiaries’ employees or employment practices relating to the Company’s or its Subsidiaries’ employees.

SECTION 2.15. Permits; Compliance. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or as disclosed in the Company SEC Reports filed prior to the date hereof, each of the Company and each its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as now being conducted (the “Company Permits”) and each such Company Permit is valid and in full force and effect. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or as disclosed in the Company SEC Reports, each of the Company and each of its Subsidiaries is, and has been, in compliance with, and to the Knowledge of the Company is not under investigation with respect to and has not been threatened to be charged with or given any notice of any violation of, any applicable Law or the terms and conditions of any Company Permit.

SECTION 2.16. Intellectual Property.

(a) Identification. Section 2.16(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all U.S. and material foreign (i) issued Patents and Patent applications, (ii) Trademark registrations and applications, (iii) Copyright registrations and applications, in each case, which are owned by the Company.

(b) Licenses. Section 2.16(b) of the Company Disclosure Schedule sets forth a list of all material licenses of Intellectual Property Rights under which the Company is either a (i) licensor, or (ii) licensee, distributor or reseller, the loss of which could have a Company Material Adverse Effect.

(c) Validity and Enforceability. The Company owns or has a valid right to use, free and clear of all liens, all Intellectual Property Rights necessary, or used or held for use in connection with the business of the Company, excepting only such matters as would not, in the aggregate, have a Company Material Adverse Effect. All such Intellectual Property Rights are subsisting, valid and enforceable, excepting only such matters as would not, in the aggregate, have a Company Material Adverse Effect.

(d) Rights. Except for the matters identified in Section 2.16(d) of the Company Disclosure Schedule, (i) none of the Intellectual Property Rights that are owned or licensed by the Company or any of its Subsidiaries conflicts with, infringes upon or misappropriates or otherwise violates the Intellectual Property Rights of any third party, excepting only such matters as would not, in the aggregate, have a Company Material Adverse Effect, (ii) the Company has

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not been sued, charged in writing with, or named a defendant in, any claim, suit, action or proceeding involving a claim of infringement of any Intellectual Property Rights of others, (iii) to the Knowledge of the Company, there is no threatened claim of infringement by the Company or any of its Subsidiaries of any Intellectual Property Rights of others, and to the Knowledge of the Company, there is no continuing infringement by others of the Intellectual Property Rights of the Company or any of its Subsidiaries. No Intellectual Property Rights of the Company are subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use thereof by the Company or any of its Subsidiaries. None of the Company or any of its Subsidiaries has entered into any agreement to indemnify any other individual or entity against any charge of infringement of any Intellectual Property Right other than in the ordinary course of business. Except as set forth in Section 2.20(a)(i) of the Company Disclosure Schedule, there are no Persons authorized or privileged to use the Intellectual Property Rights under any contract other than such rights as are granted to customers in the ordinary course of business.

(e) Definitions. For purposes of this Agreement, “Intellectual Property Rights” means all U.S. and foreign (i) patents, patent applications, patent disclosures, and all related continuations, continuations-in-part, divisionals, reiusses, re-examinations, substitutions, and extensions thereof (“Patents”), (ii) trademarks, service marks, trade names, domain names, logos, slogans, trade dress, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing (“Trademarks”), (iii) copyrights and copyrightable subject matter (“Copyrights”), (iv) rights of publicity (v) Company Software and (vi) any other relevant proprietary intellectual property rights. For purposes of this Agreement, “Company Software” means computer software, programs and databases in any form (including Internet web sites, web content and links, all versions, updates, corrections, enhancements, and modifications thereof, and all related documentation) (i) material to the operation of the business of the Company or any of its Subsidiaries, including all computer software and databases operated by the Company or any of its Subsidiaries on its web sites or used by the Company or any of its Subsidiaries in connection with processing customer orders, storing customer information, or storing or archiving data, but excluding software that is in general distribution to users of personal computers, and (ii) owned, manufactured, distributed, sold, licensed or marketed by the Company or any of its Subsidiaries.

SECTION 2.17. Insurance. Section 2.17 of the Company Disclosure Schedule lists all insurance policies, binders and surety and fidelity bonds relating to the Company or any of its Subsidiaries (including, without limitation, all policies or binders of casualty, general liability and workers’ compensation insurance), all of which are currently in effect, and the Company has made available to TAS or its representatives for review documentation evidencing such policies and binders. All premiums and other amounts due and payable under each such policy, binder and bond have been paid. Neither the Company nor any of its Subsidiaries is in default with respect to any material provision contained in any such policy, binder or bond and neither the Company nor any of its Subsidiaries has failed to give any notice of or present any material claim thereunder as required by the terms thereof. The Company has not received any written notice of cancellation or non-renewal of any such policy, binder or bond.

SECTION 2.18. Opinion of Financial Advisor. The Special Committee has received the opinions of Houlihan Lokey Howard & Zukin Financial Advisors, Inc., financial advisor to the Special Committee, to the effect that, as of the date of this Agreement, (i) the Per

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Share Merger Consideration is fair, from a financial point of view, to the holders of Shares and rights to acquire Shares (other than TAS and the TAS Stockholders) and (ii) the Stock Conversion Price is fair, from a financial point of view, to the holders of Shares (other than TAS and the TAS Stockholders), which opinions will be confirmed in writing and a copy of which will be (i) delivered to TAS solely for informational purposes after receipt thereof by the Company and (ii) made available to TAS and the Company for inclusion in the Proxy/Information Statement or other documents contemplated by Section 5.03 describing the transactions provided for in this Agreement which will be distributed to the stockholders of the Company.

SECTION 2.19. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Affiliates.

SECTION 2.20. Antitakeover Provisions and Rights Agreements.

(a) Antitakeover Provisions. The Company has taken all actions necessary such that no restrictive provision of any “fair price,” “moratorium,” “control share acquisition,” “business combination,” “stockholder protection,” “interested shareholder” or other similar anti-takeover statute or regulation (including, without limitation, Section 203 of the DGCL) or similar restrictive provision in the Certificate of Incorporation or By-laws or comparable organizational documents of any of the Company’s Subsidiaries is, or at the Effective Time will be, applicable to the this Agreement or to the transactions contemplated hereby.

(b) Rights Agreements. The Company does not have any stockholder rights plan or similar agreement or arrangement.

SECTION 2.21. Investment Companies. Neither the Company nor any Subsidiary of the Company is an “investment company” as defined under the Investment Company Act of 1940, as amended.

SECTION 2.22. Transactions With Affiliates. All transactions, agreements, arrangements or understandings between the Company or any of its Subsidiaries, on the one hand, and the Company’s affiliates (other than wholly-owned subsidiaries of the Company) or other Persons, on the other hand (an “Affiliate Transaction”), that are required to be disclosed in the Company SEC Reports in accordance with Item 404 of Schedule S-K under the Securities Act have been so disclosed. There have been no Affiliate Transactions that are required to be disclosed under the Exchange Act pursuant to Item 404 of Schedule S-K under the Securities Act which have not already been disclosed in the SEC Reports.

SECTION 2.23. Certain Business Practices. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries nor any director, officer, agent or employee of the Company or any of its Subsidiaries has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity or for the business of the Company or any of its Subsidiaries, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provision of

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the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful payment.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF TAS

TAS hereby represents and warrants to the Company that:

SECTION 3.01. Corporate Organization. TAS is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. TAS has the requisite corporate power and corporate authority to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary other than in such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a TAS Material Adverse Effect.

SECTION 3.02. Authority Relative to the Transactions. TAS has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery by TAS of this Agreement and the consummation by TAS of the Transactions have been duly and validly authorized by all necessary corporate action, and, except as provided in this Section 3.02, no other corporate proceedings on the part of TAS are necessary to authorize this Agreement or to consummate the Transactions. The approval and adoption of this Agreement and the Merger by the holders of a majority of the then outstanding shares of common stock of TAS and the filing and recordation of the Certificate of Merger as required by the DGCL are the only actions required under the DGCL and applicable Delaware Law to authorize the Merger. This Agreement has been duly and validly executed and delivered by TAS and, assuming due authorization, execution and delivery by the Company, constitutes the legal, valid and binding obligation of each of TAS, enforceable against TAS in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all Laws relating to fraudulent transfers), reorganization, moratorium or similar Laws affecting creditors’ rights generally and subject to the effect of general principles of equity (regardless of whether considered in a proceeding at Law or in equity). The Board of Directors of TAS, at a meeting duly called and held prior to the execution of this Agreement, has adopted resolutions approving and declaring advisable this Agreement and the Merger (such approval and adoption having been made in accordance with the DGCL and the Certificate of Incorporation of TAS).

SECTION 3.03. No Conflict; Required Filings and Consents. The execution and delivery by TAS of this Agreement does not, and the performance by TAS of this Agreement and the consummation of the Transactions by TAS will not:

(a) violate the Certificate of Incorporation or By-laws of TAS;

(b) violate any Law applicable to TAS or by which any of its property or assets is bound or affected, other than any such violation that would not, individually or in the aggregate, reasonably be expected to have a TAS Material Adverse Effect; or

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(c) result in any breach of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of TAS pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which TAS is a party or by which TAS or any of its property or assets is bound or affected, except for any such conflicts, violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, reasonably be expected to have an TAS Material Adverse Effect.

SECTION 3.04. Governmental Consents. The execution, delivery, and performance of this Agreement by TAS and the consummation by TAS of the transactions contemplated hereby do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Authority, except for (i) those required under or in relation to (A) the Exchange Act or the Securities Act, (B) compliance with the applicable requirements of the HSR Act, (C) the DGCL with respect to the filing of the Certificate of Merger, (D) rules and regulations of the New York Stock Exchange and (E) such as may be required under any applicable state securities or blue sky laws and (ii) such other consents, permits, approvals, orders or authorizations the failure of which to obtain would not, individually or in the aggregate, reasonably be expected to have a TAS Material Adverse Effect.

SECTION 3.05. Financing. TAS will have at the Effective Time, through cash held in escrow pursuant to the terms of the Escrow Agreement and cash provided by the TAS Stockholders, the funds necessary to consummate the Merger, including the payment of the aggregate Per Share Merger Consideration and the consideration contemplated by Section 1.08 of this Agreement and to pay all related fees and expenses of TAS.

SECTION 3.06. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of TAS or any of its Affiliates.

SECTION 3.07. Interim Operations of TAS. TAS was formed solely for the purpose of effecting the Merger, has engaged in no other business activities and has conducted its operations only as contemplated hereby or in connection therewith.

SECTION 3.08. Litigation. There is no action, suit or proceeding pending or threatened before any Governmental Authority against TAS or any of its Subsidiaries, and no judgment, decree, injunction, rule, order or similar action of any Governmental Authority is outstanding against TAS or any of its Subsidiaries that, in any such case, seeks directly or indirectly to restrain or prohibit the consummation of the Merger.

SECTION 3.09. Stock Ownership and Contribution. LJH, Ltd. (“LJH”) is the beneficial owner of 15,385,812 shares of Company Common Stock (the “LJH Shares”). Owl Creek Partners, L.P., Owl Creek Partners II, L.P., Owl Creek Overseas Fund I, Ltd. and Owl Creek Overseas Fund II, Ltd. (together, the “Owl Creek Entities”) are the beneficial owners of an aggregate of 3,722,399 shares of the Company Common Stock (the “Owl Creek Shares”). LJH and the Owl Creek Entities are the sole stockholders of TAS (collectively, the “TAS Stockholders”). Prior to the Effective Time of the Merger, the LJH Shares and the Owl Creek

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Shares (collectively, the “TAS Shares”) will be contributed to TAS and TAS will be the record holder of the TAS Shares at the Effective Time of the Merger.

ARTICLE IV

CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 4.01. Conduct of Business by the Company Pending the Merger.

(a) Ordinary Course. The Company agrees that, between the date of this Agreement and the Effective Time, except as expressly contemplated by any other provision of this Agreement or as set forth in Section 4.01 of the Company Disclosure Schedule, unless TAS shall otherwise consent in writing (such consent not to be unreasonably withheld or delayed) it being agreed by TAS that any action approved or authorized by John Cawthron in his capacity as Chief Executive Officer of the Company will be deemed to have received such consent:

(i) the businesses of the Company and its Subsidiaries shall be conducted in the ordinary course of business and in a manner consistent with past practice; and

(ii) the Company shall use commercially reasonable efforts to preserve intact the business organization of the Company and its Subsidiaries, to keep available the services of the current officers and employees of the Company and its Subsidiaries and to preserve the current relationships of the Company and its Subsidiaries with customers, suppliers and other Persons with which the Company or any of its Subsidiaries has significant business relations.

(b) Required Consent. Except as expressly contemplated by any other provision of this Agreement or as set forth in Section 4.01 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or propose to do, any of the following without the prior written consent of TAS (such consent not to be unreasonably withheld or delayed), it being agreed by TAS that any action approved or authorized by John Cawthron in his capacity as Chief Executive Officer of the Company will be deemed to have received such consent:

(i) amend or otherwise change its Certificate of Incorporation or By-laws or equivalent organizational documents;

(ii) issue, purchase, sell, pledge, dispose of, grant or encumber, or authorize such issuance, purchase, sale, pledge, disposition, grant, or encumbrance of:

(A) any shares of any class of capital stock or other equity interests or other securities of the Company or any of its Subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock or other equity interest or other securities (including, without limitation, any phantom interest), of the Company or any of its Subsidiaries (except for the issuance of Shares issuable pursuant to warrants and employee stock options outstanding on the date of this Agreement and granted under Company Stock Plans in effect on the date of this Agreement); or

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(B) any material assets of the Company or any of its Subsidiaries having an aggregate fair value in excess of $1,000,000;

(iii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, other than to the Company or to any wholly owned Subsidiary of the Company;

(iv) repurchase, redeem or otherwise acquire or cause to cease to be issued and outstanding any capital stock of the Company without the consent of TAS and the Special Committee;

(v) reclassify, combine, split, subdivide or effect any similar transaction with respect to, or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock;

(vi) other than in the ordinary course of business and consistent with past practice:

(A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any significant amount of assets; or

(B) issue any debt securities or similar obligations, incur indebtedness for borrowed money or grant any lien or security interest securing obligations with respect to indebtedness, or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person other than pursuant to the CIT Debt; or

(C) make any material loan, advance or capital contribution to, or investment in, any other Person, other than to the Company or to any wholly owned Subsidiary of the Company;

(vii) (A) hire any additional employees other than in the ordinary course of business, except (A) to fill vacancies arising after the date of this Agreement; or (B) to meet increased demand.

(B) make any offers to any officer or other executive employee (or any person who following such action, would be an officer or executive employee) of an employment position other than the employment position he or she currently holds, except for offers of an employment position made in the ordinary course of business and consistent with past practice in connection with the promotion or demotion of any employee of the Company or any of its Subsidiaries who is not a director or officer of the Company;

(C) increase the compensation payable or to become payable to, or except as required to comply with applicable Law, adopt, enter into, terminate, amend or increase the amount or accelerate the payment or vesting of any benefit or award or amount payable under any Company Stock Plan or other Plan or other arrangement for the current or future benefit or welfare of, any director, officer or employee, except for increases in the ordinary course of business and consistent with past practice in salaries or wages of executive employees of the Company or any of its Subsidiaries who are not directors or officers of the Company;

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(D) grant any loan, advance, extensions of credit to current or former employees or forgiveness or deferral of any loans due from any employee other than in the ordinary course of business in amounts not to exceed $50,000 in any individual case and $500,000 in the aggregate;

(E) establish, adopt, enter into, terminate or amend any Plan or establish, adopt or enter into any plan, agreement, program, policy, trust, fund or other arrangement that would be a Plan if it were in existence as of the date of this Agreement for the benefit of any director, officer or employee except as required by this Agreement or the Transactions contemplated hereby, or as required by ERISA, the Code or to otherwise comply with applicable Law;

(F) other than bonuses earned through the date hereof and other than in the ordinary course of business consistent with past practice for employees other than officers and directors, grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Plan; provided that there shall be no grant or award to any director, officer or employee of stock options, restricted stock, stock appreciation rights, or other stock-based awards, or any removal of existing restrictions in any Company Stock Plan or other Plan or agreements or awards made thereunder (provided that equity awards may be transferred in accordance with the applicable plan document or agreement);

(G) enter into, amend or terminate any employment or severance agreement with or, except in accordance with the existing obligations of the Company or any of its Subsidiaries, grant any severance, termination, change in control or transaction bonus or pay to, any employee, officer or director of the Company or any of its Subsidiaries, except, with respect to non-officer employees, in the ordinary course of business;

(H) other than benefits accrued through the date hereof and other than in the ordinary course of business for employees other than officers or directors of the Company, pay any benefit not provided for under any Plan;

(viii) enter into, amend or modify in any material respect, or consent to the termination of, any Material Contract, or amend, waive or modify in any material respect, fail to renew, or consent to the termination of, the Company’s or any of its Subsidiaries’ rights thereunder other than in the ordinary course of business consistent with past practice;

(ix) fail to make in a timely manner any required filings with the SEC required under, and in compliance with, the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder;

(x) change any Tax election, annual tax accounting period, or method of tax accounting, file amended Tax Returns or claims for Tax refunds by the Company or its Subsidiaries, enter into a closing agreement relating to Taxes or any settlement of any Tax claim, audit or assessment;

(xi) make any changes in its accounting methods, principles or practices currently in effect, except as required by changes in GAAP or by Regulation S-X under the Exchange Act, in each case as concurred in by its independent public accountants;

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(xii) file a petition under Chapter 11 of the United States Bankruptcy Code or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;

(xiii) except as required by applicable Law or GAAP, revalue in any material respect any of its assets, including writing down the value of inventory in any material manner, or writing-off notices or accounts receivable in any material manner;

(xiv) pay, discharge, satisfy, settle or compromise any claim, litigation, liability, obligation (absolute, asserted or unasserted, contingent or otherwise) or any Action, except for settlements or compromises involving amounts not exceeding $300,000 in the aggregate, including all fees, costs and expenses associated therewith;

(xv) enter into any negotiation with respect to, or adopt or amend in any respect, any collective bargaining agreement;

(xvi) enter into any material agreement or arrangement with any of its officers, directors, employees or any “affiliate” or “associate” of any of its officers or directors (as such terms are defined in Rule 405 under the Securities Act);

(xvii) make, authorize or agree to make any capital expenditures, or enter into any agreement or agreements providing for payments, except for capital expenditures not exceeding (i) $2,000,000 in the aggregate, or (ii) $1,000,000 in respect of any single capital expenditure or series of related capital expenditures;

(xviii) terminate or fail to renew any Company Permit that is material to the conduct of the businesses of the Company or any of its Subsidiaries;

(xix) fail to maintain in full force and effect all insurance (including self-insurance) currently in effect, subject to renewal in the ordinary course of business consistent with past practice;

(xx) take any action or omit to take any action within its control that would, or is reasonably likely to, result in any of the conditions to the Merger set forth in Article VI of this Agreement not being satisfied; or

(xxi)authorize, agree or commit to do any of the foregoing.

SECTION 4.02. Advice of Changes; Government Filings.

(a) Advice of Changes. Each party shall promptly advise the other orally and in writing of (i) any representation or warranty made by it in this Agreement (A) to the extent qualified by Material Adverse Effect or other materiality qualifier becoming untrue or inaccurate and (B) to the extent not qualified by Material Adverse Effect becoming untrue or inaccurate in any material respect except that this clause (B) shall be deemed satisfied so long as such representations or warranties being untrue or inaccurate do not have a Material Adverse Effect on the Company or TAS, as the case may be, or (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement required to be complied with or satisfied by it under this Agreement. However, no such notification shall affect the

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representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties or the remedies available under this Agreement.

(b) Filings. The Company shall deliver to TAS copies of all reports and filings made with the SEC before the same are filed. Subject to applicable Laws relating to the exchange of information, each of the Company and TAS shall have the right to review in advance, and to the extent practicable each will consult with the other, with respect to all the information relating to the other party and each of their respective Subsidiaries, which appears in any filings, announcements or publications made with, or written materials submitted to, any third party or any Governmental Authority in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as practicable. Each party agrees that, to the extent practicable, it will consult with the other party with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other party apprised of the status of matters relating to completion of the transactions contemplated hereby.

SECTION 4.03. Tax Matters. During the period from the date of this Agreement to the Effective Time, the Company and its Subsidiaries shall:

(a) prepare and timely file all Tax Returns required to be filed by them on or before the Closing Date (“Post-Signing Returns”) in a manner consistent with past practice, except as otherwise required by applicable Laws;

(b) consult with TAS with respect to all material Post-Signing Returns and deliver drafts of such Post-Signing Returns to TAS no later than ten Business Days prior to the date on which such Post-Signing Returns are required to be filed;

(d) properly reserve (and reflect such reserve in their books and records and financial statements), for all Taxes payable by them for which no Post-Signing Return is due prior to the Effective Time in a manner consistent with past practice;

(e) promptly notify TAS of any Legal Action or audit pending or threatened against the Company or any of its Subsidiaries in respect of any Tax matter, including Tax liabilities and refund claims, and not settle or compromise any such Legal Action or audit without TAS’s prior written consent in excess of $250,000;

(f) not make or revoke any election with regard to Taxes or file any amended Tax Returns;

(g) not make any change in any Tax or accounting methods or systems of internal accounting controls (including procedures with respect to the payment of accounts payable and collection of accounts receivable), except as may be appropriate to conform to changes in Tax laws or regulatory accounting requirements or GAAP; and

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(h) terminate all Tax Sharing Agreements to which the Company or any of its Subsidiaries is a party such that there are no further Liabilities thereunder.

ARTICLE V

ADDITIONAL AGREEMENTS

SECTION 5.01. Stockholders’ Meeting. The Company, acting through the Special Committee, upon the date (the “Meeting Commencement Date”) that is the earlier to occur of (a) receipt of written notice from TAS requesting that the Company proceed to call and hold a stockholders meeting pursuant to this Section 5.01 and (b) the date that is the earlier of (x) seventy-five (75) days after the date of the initial Schedule 13E-3 filing with respect to the Merger and (y) October 30, 2006, and subject to Section 5.04, shall:

(i) in accordance with applicable Law and the Company’s Certificate of Incorporation and By-laws, duly and promptly call, give notice of, convene and hold, an annual or special meeting of its stockholders for the purpose of considering and taking action on this Agreement and the Merger (the “Stockholders’ Meeting”) no later than ninety (90) days following the Meeting Commencement Date and without regard to any Change in the Company Recommendation; and

(ii) (A) subject to Section 5.06(d), include in the Proxy/Information Statement, and not subsequently withdraw or modify in any manner adverse to TAS, the unanimous resolution of the Special Committee and the Company Board (1) that the terms of this Agreement are fair to and in the best interests of the stockholders of the Company (other than TAS and the TAS Stockholders), (2) declaring this Agreement to be advisable, and (3) recommending that the stockholders of the Company vote to approve and adopt this Agreement and the Merger; and

(B) use its best efforts to obtain the Company Stockholder Approval, subject to Section 5.06(d), and otherwise comply with all requirements of Law applicable to the Stockholders’ Meeting.

SECTION 5.02. Approval of TAS.

(a) TAS will, following the execution of this Agreement (and in no event later than 48 hours from the execution of this Agreement), deliver to the Company a copy of a written consent and proxy executed by TAS adopting this Agreement and the Merger in its capacity as a stockholder of the Company with respect to all shares of Company Common Stock it owns or may hereafter acquire.

(b) TAS shall, at any meeting of the stockholders of the Company (whether annual or special and whether or not an adjourned or postponed meeting), however called, pursuant to Section 5.01, (A) when a meeting is held, appear at such meeting or otherwise cause all TAS Shares owned of record or beneficially by it to be counted as present thereat for the purpose of establishing a quorum, (B) vote (or cause to be voted) in person or by proxy all TAS Shares owned of record or beneficially by it in favor of the adoption of the Agreement and the approval of the Merger and for any other matters necessary for consummation of the Transactions and (C)

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vote (or cause to be voted) all TAS Shares owned of record or beneficially by it against (X) any proposal for any recapitalization, reorganization, liquidation, merger, sale of assets or other business combinations between the Company and any other Person (other than the Merger) and (Y) any other action that could reasonably be expected to impede, interfere with, delay, postpone or adversely affect the Merger or any of the Transactions.

SECTION 5.03. Proxy/Information Statement.

(a) Filing. The Company shall file with the SEC, as promptly as practicable following the calling of a Stockholders’ Meeting, if any, a proxy statement under Section 14 of the Exchange Act and otherwise complying with the applicable provisions of the Exchange Act and of the rules and regulations promulgated under the Exchange Act, relating to the Company Stockholders’ Meeting (the “Proxy Statement”). The Company shall cooperate with TAS and the TAS Stockholders, and assist them as reasonably requested, in filing, with the SEC, as promptly as practicable following the execution of this Agreement, an information statement on Schedule 13E-3 under Section 13(e) of the Exchange Act, and otherwise in complying with the applicable provisions of the Exchange Act and the rules and regulations promulgated under the Exchange Act, relating to the Company Stock Purchase, the Merger, and, if applicable, the Stockholders’ Meeting (the “Information Statement,” and referred to herein together with the Proxy Statement as the “Proxy/Information Statement”). TAS and the Company shall cooperate with each other in the preparation of the Proxy/Information Statement and in responding to any comments of the SEC with respect to the Proxy/Information Statement or any requests by the SEC for any amendment or supplement thereto or for additional information and to cause the Proxy/Information Statement and all required amendments and supplements thereto to be mailed to the holders of Shares entitled to vote at the Stockholders’ Meeting or to receive the Information Statement at the earliest practicable time. Each of TAS and the Company shall promptly inform the other and its counsel of all communications received from the SEC with respect to the Proxy/Information Statement and consult together with their respective counsel regarding all communications proposed to be delivered to the SEC with respect to the Proxy/Information Statement prior to the delivery thereof, in each case on as prompt a basis as is practicable

(b) Review. Each of TAS and the Company and its respective counsel shall have a reasonable opportunity to review and comment on:

(i) the Proxy/Information Statement, including all amendments and supplements thereto, prior to such documents being filed with the SEC or disseminated to holders of Shares; and

(ii) all responses to requests for additional information and replies to comments from the SEC or the staff thereof prior to their being filed with, or sent to, the SEC. Each of the Company and TAS agrees to use its reasonable best efforts, after consultation with the other parties hereto, to respond promptly to all such comments of and requests by the SEC.

(c) TAS Information. In accordance with the foregoing, TAS will furnish such information relating to TAS as may be required by the Exchange Act to be included in the Proxy/Information Statement. TAS agrees that none of the information supplied or to be supplied by or on behalf of TAS for inclusion or incorporation by reference in the Proxy/Information

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Statement will, at the date it is first mailed to the stockholders of the Company or at the time of the Stockholders’ Meeting pursuant to the Proxy Statement or purchase of securities of the Company pursuant to the Information Statement, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances in which they are made, not misleading. Notwithstanding the foregoing, TAS makes no covenant with respect to the information supplied or to be supplied by or on behalf of the Company or its Subsidiaries for inclusion or incorporation by reference in the Proxy/Information Statement.

(d) Company Information. In accordance with the foregoing, the Company will furnish such information relating to the Company and its Subsidiaries as may be required by the Exchange Act to be included in the Proxy/Information Statement. The Company agrees that none of the information supplied or to be supplied by or on behalf of the Company or its Subsidiaries for inclusion or incorporation by reference in the Proxy/Information Statement will, at the date it is first mailed to the stockholders of the Company or at the time of the Stockholders’ Meeting or purchase of securities of the Company pursuant to the Information Statement, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances in which they are made, not misleading. Notwithstanding the foregoing, the Company makes no covenant with respect to the information supplied or to be supplied by or on behalf of TAS for inclusion or incorporation by reference in the Proxy/Information Statement.

SECTION 5.04. Merger Without Meeting of Stockholders. Notwithstanding the foregoing, in the event that TAS shall own at least ninety percent (90%) of the outstanding Shares at any time prior to the Effective Time (including without limitation as a result of the Conversion) (the “90% Threshold”), the parties hereto agree, within two Business Days after TAS attains the 90% Threshold, to take all necessary and appropriate action to cause the Merger to become effective, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. In such event, the consideration payable in the Merger shall be the Per Share Merger Consideration, the Option Consideration and the Purchase Right Consideration as provided in Article I hereof, and all conditions to closing the Merger pursuant to Article VI shall no longer be applicable to the Merger, it being understood that TAS and the TAS Stockholders may not acquire any additional Shares unless all required filings with the SEC by the Company, TAS and its Affiliates shall have been made, and all related deliveries of documents to the stockholders of the Company and the passage of notice periods required under the Exchange Act, shall have occurred, including those contemplated by Sections 14(a) and 13(e) of the Exchange Act and the rules and regulations thereunder, to the extent applicable. Without limiting the Company’s obligations pursuant to this Section 5.04, the Company shall take all necessary and appropriate action requested by TAS to enable TAS to give any notice to the Company stockholders required by Law, including, without limitation, any notice required by Section 262 of the DGCL.

SECTION 5.05. Access to Information.

(a) Access. Subject to applicable Law, from the date of this Agreement until the Effective Time, the Company shall (and shall cause its Subsidiaries to):

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(i) provide to TAS and TAS’s Representatives access, during normal business hours and upon reasonable notice by TAS, to the officers, employees, agents, properties, offices and other facilities of the Company and its Subsidiaries and to the books and records thereof; and

(ii) furnish to TAS such information concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of the Company as TAS or its Representatives may reasonably request.

(b) No Waiver. Except as otherwise expressly provided herein, no information or knowledge obtained by any party pursuant to this Section 5.05 or otherwise shall affect or be deemed to modify any representation or warranty made by any party hereunder.

SECTION 5.06. No Solicitation of Transactions.

(a) Acquisition Proposals. The Company shall not, and the Company shall cause its Subsidiaries, and the Company and the Subsidiaries shall instruct their respective Representatives, not to, directly or indirectly:

(i) solicit, initiate or knowingly facilitate or encourage any inquiries for the making of any proposal or offer (including any proposal or offer to Company stockholders) that constitutes, or would reasonably be expected to lead to, any Competing Transaction (as defined below) (each such proposal or offer an “Acquisition Proposal”);

(ii) participate in discussions or negotiations with, disclose or provide any non-public information relating to the Company or its Subsidiaries to any Person with respect to or in connection with any Acquisition Proposal (except to notify such Person of the existence and terms of this Section 5.06);

(iii) agree to, approve, endorse or recommend any Competing Transaction or enter into any letter of intent, agreement in principle, merger or sale agreement or similar agreement providing for or otherwise relating to any Competing Transaction;

(iv) grant any waiver or release under any standstill or similar agreement by any Person who has made an Acquisition Proposal; or

(v) authorize or direct any Representative of the Company or any of its Subsidiaries to take any such action.

The Company shall, and shall cause its Subsidiaries and instruct its and their Representatives to, immediately cease and cause to be terminated all existing discussions or negotiations with any Person conducted heretofore with respect to any proposal relating to a Competing Transaction. Notwithstanding the foregoing, actions taken or authorized by John Cawthron in relation to any Acquisition Proposal will not be deemed to violate this Section 5.06.

(b) Response to Acquisition Proposal. Notwithstanding the foregoing and anything to the contrary in this Agreement, before the receipt of the Company Stockholder Approval, the Company Board or Special Committee may furnish information to, and enter into discussions and negotiations with, a Person who has made a written Acquisition Proposal, but only if:

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(i) such Acquisition Proposal was made after the date of this Agreement (it being understood that, subject to compliance with Section 5.06(a), such an Acquisition Proposal made after the date of this Agreement by a Person who made an Acquisition Proposal regarding a Competing Transaction prior to the date of this Agreement shall be considered a new Acquisition Proposal made after the date of this Agreement) and none of the Company, its Subsidiaries and their Representatives has violated any of the restrictions set forth in this Section 5.06;

(ii) the Company Board or Special Committee has determined in good faith after consultation with outside legal counsel (who may be the Company’s regularly engaged outside legal counsel or counsel to the Special Committee) and a financial advisor that such Acquisition Proposal constitutes, or is reasonably likely to result in, a Superior Proposal (as defined below);

(iii) prior to taking such action such Person shall have executed a confidentiality agreement (a copy of which shall promptly be provided to TAS);

(iv) there is provided or made available to TAS, on a substantially concurrent basis, any non-public information provided or made available to such Person that was not previously provided or made available to TAS and its Representatives; and

(v) the Company shall have delivered to TAS a prior written notice advising TAS that the Company Board or Special Committee, as applicable, intends to take such action, and shall keep TAS reasonably informed on a current basis as to the status of and any material developments regarding any such inquiry or proposal.

(c) Notice of Superior Proposal. In addition to the obligations of the Company set forth in Sections 5.06(a) and (b), the Company shall promptly as practicable (and, in any event, within 24 hours) (i) advise TAS, telephonically and in writing, of the Company’s receipt of any Acquisition Proposal, any request for information relating to the Company or any of its Subsidiaries or for access to the officers, employees, agents, business, properties, assets, books or records of the Company or any of its Subsidiaries by any Person that has made, or would reasonably be expected to make, an Acquisition Proposal and (ii) provide TAS, in writing, with the material terms and conditions of any such Acquisition Proposal, and a copy of such Acquisition Proposal, inquiry or request and the identity of the Person making the same. The Company shall inform TAS as promptly as practicable (and, in any event, within 24 hours) of any change to the material terms of any such Acquisition Proposal. As promptly as practicable (and, in any event, within 24 hours) after determination by the Company Board or Special Committee that an Acquisition Proposal constitutes a Superior Proposal, the Company shall deliver to TAS a written notice (a “Notice of Superior Proposal”) advising it of such determination, specifying the terms and conditions of such Superior Proposal and the identity of the Person making such Superior Proposal, and providing TAS with a copy of the Superior Proposal. Any notice or action required to be taken within 24 hours in this Section 5.06, will, if the triggering event for such action or notice occurred after 3:00 p.m. on a Friday, Saturday or Sunday or the day before a holiday, be timely taken or delivered if acted upon by the earlier to occur of (i) within 24 hours of the receipt of actual notice thereof by any member of the Special Committee or (ii) by 5:00 p.m. on the next succeeding Business Day. An Acquisition Proposal received by John Cawthron will not be deemed received by the Company unless and until he delivers it to counsel for the Special Committee and to a member of the Special Committee.

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(d) Change in Recommendation. If, prior to the Company Stockholder Approval, the Company Board or the Special Committee determines, in its good faith judgment and after consulting with outside legal counsel (who may be the Company’s regularly engaged outside legal counsel or counsel to the Special Committee), that making a Change in the Company Recommendation (as defined below) is necessary in order for the Company Board to comply with its fiduciary duties to the Company’s stockholders under applicable Law, then the Company Board or the Special Committee may make a Change in the Company Recommendation in accordance with this Section 5.06 and following such Change in Company Recommendation, the Company may terminate this Agreement solely in accordance with Section 7.01(d). “Change in the Company Recommendation” means the Special Committee or Company Board’s (i) failure to make, withdrawal of, or modification in a manner adverse to TAS of the Company Recommendation, (ii) failure to publicly confirm the Company Recommendation within seven days following TAS’s written request, (iii) recommendation or endorsement of a Competing Transaction or (iv) resolution or public announcement of an intention to do any of the foregoing. The Company Board may not make a Change in the Company Recommendation unless (i) at least two Business Days prior to taking such action TAS shall have received written notice from the Company (an “Adverse Recommendation Notice”) (A) advising that the Company Board intends to make such Change in the Company Recommendation, (B) if such Change in Company Recommendation is made in response to a Superior Proposal, advising TAS that the Company Board has received a Superior Proposal, and (C) if such Change in Company Recommendation is made in response to a Superior Proposal, containing all information required by Section 5.06(c), together with copies of any written offer or proposal in respect of such Superior Proposal (it being understood and agreed that any material amendment to the financial terms or other material terms of such Superior Proposal shall require a new Adverse Recommendation Notice and a new two (2) Business Day period) and (ii) during such two Business Day period the Special Committee shall have negotiated in good faith with TAS concerning any amendments proposed by TAS to this Agreement and to the transactions contemplated hereby. Nothing contained in this Agreement shall prohibit the Company, the Company Board or the Special Committee from disclosing to the Company Stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, if, in the good faith judgment of the Company Board or the Special Committee, after consultation with its outside legal and financial advisors, such disclosure is required in order for the Company Board or the Special Committee, as applicable, to comply with its fiduciary obligations, or is otherwise required under applicable Law. Nothing in this Agreement shall prohibit the Company Board or the Special Committee from making a Change in Company Recommendation prior to the Company Stockholder Approval if the Company Board or Special Committee, as applicable, determines in good faith (after consultation with outside legal counsel) that such action is necessary under applicable Law in order for the directors to comply with their fiduciary duties to the Company’s stockholders.

(e) Discussions Prior to Agreement. The fact that the Company, any of its Subsidiaries, or any of their Representatives have had discussions or negotiations with Persons prior to the date of this Agreement regarding a possible Acquisition Proposal shall not prevent the Company from taking any of the actions permitted by this Section 5.06 with respect to a new Acquisition Proposal submitted by any such Person after the date of this Agreement, that was not solicited in violation of this Section 5.06.

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(f) Definition of Competing Transaction. A “Competing Transaction” means any of the following (other than the Transactions) involving the Company or any of its Subsidiaries, other than the Merger or any other Competing Transaction to which TAS, the TAS Stockholders or any of their Affiliates are a party:

(i) any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or other similar transaction (including any so-called merger-of-equals and whether or not the Company is the entity surviving any such transaction) involving the Company or any of its Subsidiaries which results in any person beneficially owning 20% or more of any class of equity or voting securities of the Company or of any of its Subsidiaries or 20% or more of the assets of the Company and its Subsidiaries (directly or indirectly, including by the ownership of equity or voting securities);

(ii) any sale, lease, exchange, transfer or other disposition (directly or indirectly, including by the transfer of equity or voting securities) of 20% or more of the assets of the Company and its Subsidiaries;

(iii) any sale, exchange, transfer or other disposition of equity or voting securities in which the Company or any of its Subsidiaries participates and which results in any person beneficially owning 20% or more of any class of equity or voting securities of the Company or of any of its Subsidiaries; or

(iv) any transaction or series of transactions, including a tender offer or exchange offer, that, if consummated, would result in any person beneficially owning more than 20% of any class of equity or voting securities of the Company or of any of its Subsidiaries.

(g) Definition of Superior Proposal. A “Superior Proposal” means an unsolicited written offer (in its most recently amended or modified terms, if amended or modified) made in compliance with this Section 5.06 by a Person to enter into a Competing Transaction, the effect of which would be that a Person would beneficially own more than twenty percent (20%) of the issued and outstanding Common Stock, acquire more than twenty percent (20%) of the Consolidated assets of the Company and its subsidiaries, as applicable, and which the Company Board or Special Committee determines, in its good faith judgment (after consulting with its financial advisor and/or legal counsel and taking into account any amendments proposed by TAS to this Agreement or to the transactions contemplated hereby) and taking into account all relevant legal, financial, regulatory and other aspects of the offer that it deems relevant in such circumstances under the DGCL, to be more favorable to Company stockholders, from a financial point of view, than the Merger.

SECTION 5.07. Directors’ and Officers’ Indemnification; Insurance.

(a) Indemnification. Without limiting any additional rights that any employee, officer or director may have under any employment agreement or benefit Plan or under the Company’s Certificate of Incorporation or By-laws, for a period of six (6) years from the Effective Time, the Surviving Corporation shall indemnify and hold harmless each present (as of immediately prior to the Effective Time) and former officer or director of the Company and the Company’s Subsidiaries (the “Indemnified Directors and Officers”), against all claims, losses, liabilities, damages, judgments, inquiries, fines and reasonable fees, costs and expenses,

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including, attorneys’ fees and disbursements (collectively, “Costs”), incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters occurring or actions taken by them in their capacity as officers or directors at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated hereby), or taken by them at the request of the Company or any Company Subsidiary, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that applicable Law permits a Delaware corporation to indemnify its officers and directors. Each Indemnified Director and Officer will be entitled to advancement of expenses incurred in the defense of any claim, action, suit, proceeding or investigation from the Surviving Corporation within ten (10) Business Days of receipt by the Surviving Corporation from the Indemnified Director or Officer of a request therefor and reasonable documentation thereof; provided that any Person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification. The Surviving Corporation shall not settle, compromise or consent to the entry of any judgment in any proceeding or threatened action, suit, proceeding, investigation or claim (and in which indemnification could be sought by such Indemnified Director or Officer hereunder), unless such settlement, compromise or consent includes an unconditional release of such Indemnified Director or Officer from all liability arising out of such action, suit, proceeding, investigation or claim or such Indemnified Director or Officer otherwise consents.

(b) Maintenance. The Certificate of Incorporation and By-laws of the Surviving Corporation shall continue to contain provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of former or present directors and officers than are presently set forth in the Company’s Certificate of Incorporation and By-laws, which provisions shall not, except to the extent required to comply with applicable Law, be amended, repealed or otherwise modified for a period of six (6) years from the Effective Time in any manner that would adversely affect the rights thereunder of any such individuals.

(c) D&O Insurance. Prior to the Effective Time, the Company shall obtain, and the Surviving Corporation shall maintain for a period of six (6) years following the Effective Time, directors’ and officers’ liability insurance coverage with respect to matters existing or occurring at or prior to the Effective Time, from an insurance carrier with the same or better credit rating as the Company’s current insurance carrier with respect to directors’ and officers’ liability insurance, having terms and conditions and providing coverage in an amount at least as favorable to the insured parties as the terms and conditions and amounts of coverage of the Company’s existing policies; provided, that TAS and its Subsidiaries shall not be required by this Section 5.07(c) to pay annual premiums in excess of 200% of the annual premiums paid by the Company under its directors’ and officers’ liability policies as in effect as of the date hereof (the “Maximum Premium”). If the Company’s existing insurance expires, is terminated or canceled during the six (6) year period following the Effective Time or exceeds the Maximum Premium, the Surviving Corporation shall obtain as much directors’ and officers’ liability insurance as can be obtained for the remainder of such period for an annualized premium not in excess of the Maximum Premium, on terms and conditions no less advantageous to the covered parties than the Company’s existing directors’ and officer’s liability insurance.

(d) Existing Agreements. The Surviving Corporation shall honor and perform under all indemnification agreements entered into by the Company or any Company Subsidiary

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identified in Section 5.07 of the Company Disclosure Schedule as being subject to this Section 5.07(d).

(e) Survivability. Notwithstanding anything herein to the contrary, if any claim, action, suit or proceeding or investigation (whether arising before, at or after the Effective Time) is made against any Indemnified Director or Officer, on or prior to the sixth anniversary of the Effective Time, the provisions of this Section 5.07 shall continue in effect until the final disposition of such claim, action, suit, proceeding or investigation.

(f) Heirs. This covenant is intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Directors and Officers and their respective heirs and legal representatives. The indemnification provided for herein shall not be deemed exclusive of any other rights to which an Indemnified Director or Officer is entitled, whether pursuant to Law, contract or otherwise.

(g) Successors and Assigns. In the event that the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets as an entirety in one or a series of related transactions to any Person(s), then, and in each such case, proper provision shall be made so that such continuing or surviving corporation or entity or such Persons(s), as the case may be, shall assume the obligations set forth in this Section 5.07; provided that the Surviving Corporation shall not be relieved from such obligation. In addition, the Surviving Corporation shall not distribute, sell, transfer or otherwise dispose of any of its assets in a manner that would reasonably be expected to render the Surviving Corporation unable to satisfy its obligations under this Section 5.07.

SECTION 5.08. Further Action; Reasonable Best Efforts. Upon the terms and subject to the conditions of this Agreement:

(a) each of the parties hereto shall make promptly its respective filings, and thereafter make any other required submissions, under any applicable foreign, federal or state antitrust, competition or fair trade Laws with respect to the Transactions; and

(b) the Company shall cooperate with TAS and use its reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws or otherwise to consummate and make effective the Merger and the Transactions, including, without limitation, (i) using its reasonable best efforts to obtain all Permits, consents, approvals, authorizations, qualifications and orders of Governmental Authorities and parties to contracts with the Company and its Subsidiaries as are necessary for the consummation of the Transactions and to fulfill the conditions to the Merger and (ii) cooperating with TAS to respond to and defend against any litigation brought against the Company, TAS or the TAS Stockholders because of the Merger or the transactions.

SECTION 5.09. Public Announcements. The initial press release relating to this Agreement shall be a joint press release the text of which has been agreed to by each of TAS and the Company. Thereafter, subject to applicable Law, each of TAS and the Company shall use its reasonable best efforts to consult with each other before issuing any press release or otherwise

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making any public statements with respect to this Agreement, the Merger, or any of the other Transactions.

SECTION 5.10. Takeover Statute. If any “fair price,” “moratorium,” “control share acquisition,” “interested stockholder,” “business combination,” “stockholder protection,” “interested shareholder” or other similar anti-takeover statute or regulation (including, without limitation, Section 203 of the DGCL) or similar restrictive provision of the Certificate of Incorporation or By-laws or comparable organizational documents of the Company or any of its Subsidiaries (each a “Takeover Provision”) shall become applicable to the transactions contemplated hereby, the Company and the members of the Company Board or the Special Committee of the Company, subject to Section 5.06(d), shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate the effects of such Takeover Provision on the transactions contemplated hereby.

SECTION 5.11. Financing. The Company agrees to provide, and will cause its Subsidiaries and its and their respective directors, officers and employees to provide, all cooperation reasonably necessary in connection with the arrangement of financing to be consummated contemporaneously with or after the date hereof in respect of the transactions contemplated by this Agreement, including participation in meetings, the execution and delivery of any commitment letters, pledge and security documents, other definitive financing documents, or other requested certificates or documents (including a certificate of the chief financial officer of the Company with respect to solvency matters, to the extent such certification may be accurately made), audited and unaudited financial statements, comfort letters of accountants and legal opinions as may be reasonably requested by TAS and taking such other actions as are reasonably required to be taken by the Company, providing that such cooperation shall not interfere unreasonably with the business or operations of the Company or its Subsidiaries.

SECTION 5.12. Disposition of Litigation. In connection with any litigation which may be brought against the Company or its directors relating to the transactions contemplated hereby, the Company shall keep TAS, and any counsel which TAS may retain at its own expense, informed of the status of such litigation and will provide TAS’s counsel the right to participate in the defense of such litigation to the extent TAS is not otherwise a party thereto, and the Company shall not enter into any settlement or compromise of any such stockholder litigation without TAS’s prior written consent, which consent shall not be unreasonably withheld or delayed.

ARTICLE VI

CONDITIONS TO THE MERGER

SECTION 6.01. Mutual Conditions to the Merger. The obligations of the Company and TAS to consummate the Merger shall be subject to the satisfaction or waiver (where permissible), at or prior to the Closing, of the following conditions:

(a) the Company shall have obtained the Company Stockholder Approval to the extent necessary under applicable Law;

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(b) no Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law, rule, regulation, judgment, decree, executive order or award (an “Order”) which is then in effect and has the effect of making the Merger illegal or otherwise preventing or prohibiting consummation of the Merger;

(c) any waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired;

(d) no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction preventing the consummation of the Merger or the performance by TAS, the TAS Stockholders or the Company of any covenant or condition required in order to consummate the Merger, shall be in effect;

and is also subject to the following condition, which may not be waived by the parties:

(e) all required filings with the SEC by the Company, TAS and its Affiliates shall have been made, and all related deliveries of documents to the stockholders of the Company and the passage of notice periods required under the Exchange Act, shall have occurred, including those contemplated by Sections 14(a) and 13(e) of the Exchange Act and the rules and regulations thereunder, to the extent applicable.

SECTION 6.02. Conditions to Obligations of TAS. The obligations of TAS to effect the Merger shall be further subject to the satisfaction or waiver at or prior to the Effective Time of the following conditions:

(a) the representations and warranties of the Company set forth in this Agreement, disregarding all materiality and Company Material Adverse Effect qualifiers (except as set forth in Section 2.07(b)), shall be true and correct, in each case as of the date of this Agreement and at and as of the Effective Time, as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event as of such specified date), except for failures to be true and correct which would not, individually or in the aggregate, have a Company Material Adverse Effect and which result, or would reasonably be expected to result, in costs or losses to the Company, together with any costs or losses to the Company referenced in Subsection 6.02(b), aggregating in excess of $5 million, in each case determined on the basis of cash out-of-pocket costs to the Company and its Subsidiaries;

(b) the Company shall have performed in all material respects each of the obligations, and complied in all material respects with each of the agreements and covenants, required to be performed by, or complied with by, it under this Agreement at or prior to the Closing, provided that each of such obligations, agreements and covenants shall be deemed to have been performed in all material respects so long as the costs or losses to the Company arising from any breach of any thereof, or which would reasonably be expected to result in costs or losses to the Company, together with costs or losses to the Company referenced in Section 6.02(a), do not in the aggregate exceed $5 million, in each case determined on the basis of cash out-of-pocket costs to the Company and its Subsidiaries;

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(c) TAS shall have received a certificate of the Chief Executive Officer or the Chief Financial Officer of the Company, certifying that the conditions set forth in Sections 6.02(a), (b) and (d) have been satisfied;

(d) There shall not have occurred a Closing Material Adverse Effect;

(e) If LJH has given notice to the Company of its intention to exercise its right under Section 1.2(a) of the Conversion Agreement to convert the Term Loan C into shares of Common Stock, and LJH has otherwise performed its obligations under this Agreement and the Conversion Agreement, the Company shall have caused the shares of Common Stock subject to issuance pursuant to the Conversion Agreement to be issued to the TAS Stockholders;

(f) John Cawthron shall not have been removed by the Board from his positions of Chairman of the Board and Chief Executive Officer of the Company;

(g) the Company shall have obtained a fairness opinion from Houlihan Lokey Howard & Zukin as described in Section 2.18 that has not been withdrawn; and

(h) TAS shall have received from Akerman Senterfitt, counsel to the Company, their opinion as to the matters addressed in Sections 2.01(a) and (c), 2.03, 2.04 and 2.05 in form and substance reasonably acceptable to TAS and its counsel.

SECTION 6.03. Conditions to Obligations of the Company. The obligation of the Company to effect the Merger shall be further subject to the satisfaction or waiver at or prior to the Closing of the following conditions:

(a) the representations and warranties of TAS set forth in this Agreement, disregarding all materiality and TAS Material Adverse Effect qualifiers, shall be true and correct, in each case as of the date of this Agreement and at and as of the Effective Time, as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event as of such specified date), except for failures to be true and correct which would not, individually or in the aggregate, reasonably be expected to have a TAS Material Adverse Effect;

(b) TAS shall have performed in all material respects each of the obligations, and complied in all material respects with each of the agreements and covenants, required to be performed by or complied with by it under this Agreement at or prior to the Closing; and

(c) the Company shall have received certificates of the Chief Executive Officer or the Chief Financial Officer of TAS, certifying that the conditions set forth in Sections 6.03(a) and (b) have been satisfied.

ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER

SECTION 7.01. Termination. This Agreement may only be terminated and the Merger contemplated hereby may be abandoned at any time prior to the Effective Time, notwithstanding adoption thereof by the stockholders of the Company:

- 43 -

(a) by mutual written consent of TAS and the Company;

(b) by TAS or the Company if any court or other Governmental Authority of competent jurisdiction shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action is or shall have become final and non-appealable;

(c) by either TAS or the Company if the Effective Time shall not have occurred on or before the later of (i) February 15, 2007 or (ii) one hundred twenty (120) days after the Meeting Commencement Date (the “Termination Date”); provided that the right to terminate this Agreement pursuant to this Section 7.01(c) shall not be available to the party seeking to terminate if any action of such party or the failure of such party to perform any of its obligations under this Agreement required to be performed at or prior to the Effective Time has been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Termination Date and such action or failure to perform constitutes a breach of this Agreement;

(d) by the Company (i) if there shall have been a breach of any representation, warranty, covenant or agreement on the part of TAS contained in this Agreement such that the conditions set forth in Sections 6.03(a) or 6.03(b) would not be satisfied and, in either such case, such breach is not capable of being cured or, if capable of being cured, shall not have been cured prior to the Termination Date; provided that the Company shall not have the right to terminate this Agreement pursuant to this Section 7.01(d)(i) if the Company is then in material breach of any of its covenants or agreements contained in this Agreement or (ii) if prior to the obtaining of the Company Stockholder Approval (A) the Company shall have received a Superior Proposal, (B) the Company, the Company Board and the Special Committee shall have complied in all material respects with Sections 5.01 and 5.06 (including Section 5.06(d)) and (C) TAS shall have received payment of the Company Termination Fee and TAS Expenses;

(e) by TAS (i) if there shall have been a breach of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement such that the conditions set forth in Sections 6.02(a) or 6.02(b), would not be satisfied and, in any such case, such breach is not capable of being cured or, if capable of being cured, shall not have been cured prior the Termination Date; provided that TAS shall not have the right to terminate this Agreement pursuant to this Section 7.01(e)(i) if TAS is then in material breach of any of its covenants or agreements contained in this Agreement, (ii) if the Company Board shall have made a Change in Company Recommendation; or (iii) if at any time after the date of this Agreement the conditions set forth in Sections 6.02(d), (e) or (f) shall not be satisfied and in any such case (A) such failure shall not be cured by the Company within five (5) business days following written notice by TAS delivered to the Company describing in reasonable detail such failure and (B) TAS is not then in material breach of any of its covenants or agreements contained in this Agreement; or

(f) by the Company if, upon a vote taken thereon at the Stockholders Meeting or any postponement or adjournment thereof, this Agreement shall not have been adopted by the holders of at least a majority in combined voting power of the outstanding Shares.

- 44 -

SECTION 7.02. Effect of Termination. In the event of the termination of this Agreement pursuant to Section 7.01, this Agreement shall forthwith become void, and there shall be no liability under this Agreement on the part of any party hereto, except:

(a) as set forth in Section 7.03; and

(b) except as set forth in Section 7.03, nothing herein shall relieve any party from liability for fraud or for any willful breach of any of its representations, warranties, covenants or agreements set forth in this Agreement prior to such termination.

The terms of this Section 7.02, Section 1.10(c), 7.03, and Article VIII, shall survive any termination of this Agreement.

SECTION 7.03. Fees and Expenses.

(a) Generally. Except as otherwise expressly set forth in this Agreement, all fees and expenses incurred in connection with the Transactions shall be paid by the party incurring such expenses, whether or not the Merger is consummated. “Expenses” includes all reasonable out-of-pocket expenses (including all fees and expenses of financing sources, counsel, accountants, investment bankers, experts and consultants to a party hereto and its affiliates) incurred by or on behalf of a party or its prospective financing sources in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement.

(b) Company Termination Fee and TAS Expenses.

(i) In the event that this Agreement is terminated by TAS pursuant to Section 7.01(e)(ii), then the Company shall pay $750,000 (such amount, the “Company Termination Fee”) to TAS or as directed by TAS plus the TAS Expenses to TAS or as directed by TAS, as promptly as reasonably practicable (and in any event within five Business Days following such termination), payable by wire transfer of immediately available funds.

(ii) In the event that (a) this Agreement is terminated (A) by TAS pursuant to Section 7.01(e)(i) or (B) by TAS or the Company pursuant to Section 7.01(c), then the Company shall reimburse TAS for all Expenses incurred by or on behalf of TAS and its Affiliates as of the time of such reimbursement (the “TAS Expenses”), as promptly as reasonably practicable following delivery of reasonable documentation thereof (and, in any event, within five Business Days following delivery of such documentation), payable by wire transfer of immediately available funds, provided that the aggregate amount of TAS Expenses paid pursuant to this Agreement will not exceed $1,000,000.

(iii) In the event that (a) this Agreement is terminated (A) by TAS pursuant to Section 7.01(e)(i), and, at any time after the date of this Agreement and prior to the event giving rise to TAS’s right to terminate under Section 7.01(e)(i), an Acquisition Proposal shall have been publicly disclosed or otherwise communicated to the Company Board or the Special Committee, or (B) by TAS or the Company pursuant to Section 7.01(c), and at any time after the date of this Agreement and prior to the termination of this Agreement, an Acquisition Proposal shall have been publicly disclosed or otherwise communicated to the Company Board or the Special Committee and (b) within eight (8) months after such termination, the Company enters into an

- 45 -

agreement in respect of any Competing Transaction, which Competing Transaction is thereafter consummated, then the Company shall pay to TAS the Company Termination Fee (minus the amount, if any, previously paid pursuant to Section 7.03(b)(ii)) by wire transfer of immediately available funds, on the date of the consummation of the Competing Transaction; provided that, for purpose of this Section 7.03(b)(iii), the term “Competing Transaction” shall have the meaning assigned to such term in Section 5.06(f), except that the references to “20%” shall be deemed to be references to “50%”.

(iv) The payment of the Company Termination Fee and the TAS Expenses in accordance with this Section 7.03(b) shall constitute the sole and exclusive remedy of TAS for any and all damages arising under or in connection with any breach of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement. Except as provided in this Section 7.03(b), in no event shall TAS and its Affiliates or any party acting on behalf of TAS or its Affiliates, (i) seek to obtain any recovery or judgment in connection with any breach of any representation, warranty, covenant or agreement on the part of the Company contained this Agreement or (ii) be entitled to seek or obtain any other damages of any kind, including, without limitation, consequential, indirect or punitive damages, in connection with any breach of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement. The parties acknowledge that the Company Termination Fee and the TAS Expenses together constitute a reasonable estimate of the damages that will be suffered by reason of any action or omission giving rise to a right of payment of the Company Termination Fee and/or the TAS Expenses.

(v) The payment of money damages not to exceed $1,750,000 shall constitute the sole and exclusive remedy of the Company for any and all damages arising under or in connection with any breach of any representation, warranty, covenant or agreement on the part of TAS or its Affiliates contained in or contemplated by this Agreement. Except as provided in this Section 7.03(b), in no event shall the Company and its Affiliates or any party acting on behalf of the Company or its Affiliates, (i) seek to obtain any recovery or judgment in connection with any breach of any representation, warranty, covenant or agreement on the part of the TAS and its Affiliates contained or contemplated by this Agreement or (ii) be entitled to seek or obtain any other damages of any kind, including, without limitation, consequential, indirect or punitive damages, in connection with any breach of any representation, warranty, covenant or agreement on the part of TAS and its Affiliates contained in or contemplated by this Agreement. The parties acknowledge that the sum of $1,750,000 constitutes a reasonable estimate of maximum amount of damages that will be suffered by the Company and its Affiliates by reason of any action or omission of TAS or its Affiliates arising out of or relating to this Agreement.

(c) Acknowledgement. Each of the Company and TAS acknowledges that the agreements contained in this Section 7.03 are an integral part of the transactions contemplated by this Agreement. In the event that the Company shall fail to pay the Company Termination Fee or TAS Expenses when due, the Company shall reimburse TAS for all reasonable costs and expenses actually incurred or accrued by TAS (including reasonable fees and expenses of counsel) in connection with the collection under and enforcement of this Section 7.03.

SECTION 7.04. Amendment. This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors (subject, in the case of the Company, to the prior recommendation of the Special Committee) at any time prior to the

- 46 -

Effective Time. However, after the approval and adoption of this Agreement and the Transactions by the stockholders of the Company, no amendment of the type described in the proviso to the second sentence of Section 251(d) of the DGCL shall be made unless the Company shall have obtained such consents as may be required by the DGCL. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.

SECTION 7.05. Waiver. At any time prior to the Effective Time, any party hereto may:

(a) extend the time for the performance of any obligation or other act of any other party hereto;

(b) waive any inaccuracy in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto; and

Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.

ARTICLE VIII

GENERAL PROVISIONS

SECTION 8.01. Non-Survival of Representations and Warranties. The representations and warranties in this Agreement and in any certificate delivered pursuant hereto shall terminate at the Effective Time or upon the termination of this Agreement pursuant to Section 7.01, as the case may be.

SECTION 8.02. Company Stock Purchase. The Company has agreed to issue to the TAS Stockholders up to 2,400,000 shares of Common Stock pursuant to the Agreement dated July 31, 2006 between the Company, TAS and the TAS Stockholders (the “Conversion Agreement”) (subject to adjustment as provided therein) at a price of $2.50 per share (the “Stock Conversion Price”), upon conversion of the Term C Loan (the “Company Stock Purchase”). The right of the TAS Stockholders to purchase shares of Common Stock pursuant to the Conversion Agreement is subject to the condition that all required filings with the SEC by the Company, TAS, the TAS Stockholders and their respective Affiliates shall have been made, and all related deliveries of documents to the stockholders of the Company and the passage of notice periods required under 13(e) of the Exchange Act and the rules and regulations thereunder shall have occurred. The Company covenants and agrees to comply with Section 5.03 of this Agreement with respect to such matters before the SEC, and agrees that any breach of the Conversion Agreement by the Company shall constitute a breach of this Agreement as well.

SECTION 8.03. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile transmissions between the hours of 9:00 A.M. and 5:00 P.M. in the recipient party’s time zone, or by registered or certified

- 47 -

mail (postage prepaid, return receipt requested) or recognized overnight courier to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.03):


		if to TAS:		TAS Holding, Inc
				c/o Cawthron, Womack & Coker, P.C.
				First Waco Center
				1700 N. Valley Mills Drive
				P. O. Box 8256
				Waco, TX 76714
				Telephone No.: (817) ###-###-####
				Facsimile No.: (254) ###-###-####
				Attention: John Cawthron

		with a copy to:		Bracewell & Giuliani LLP
				500 N. Akard Street, Suite 4000
				Dallas, TX 75201
				Telephone No.: (214) ###-###-####
				Facsimile No.: (214) ###-###-####
				Attention: Michael W. Tankersley

		with a copy to:		Beard, Kultgen, Brophy, Bostwick &
				Dickson, LLP
				Central Tower
				5400 Bosque Boulevard, Suite 301
				Waco, TX 76710
				Telephone No.: (254) ###-###-####
				Facsimile No.: (254) ###-###-####
				Attention: Richard E. Brophy, Jr.

		with a copy to:		Schulte Roth & Zabel, LLP
				919 Third Avenue
				New York NY 10022
				Telephone No.: (212) ###-###-####
				Facsimile No.: (212) ###-###-####
				Attention: Peter J. Halasz

		if to the Company:		TIMCO Aviation Services, Inc.
				623 Radar Road
				Greensboro, NC 27410
				Telephone No.: (336) ###-###-####
				Facsimile No: (336) ###-###-####
				Attention: Chairman, CEO and CFO

		with a copy to:		Akerman Senterfitt
				One Southeast Third Avenue, 28^th Floor
				Miami, FL 33131
				Telephone No.: (305) ###-###-####

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				Facsimile No: (305) ###-###-####
				Attention: Philip B. Schwartz

		with a copy to:		Richards, Layton & Finger, P.A.
				One Rodney Square
				P. O. Box 551
				Wilmington, DE 19899
				Telephone No.: (302) ###-###-####
				Facsimile No.: (302) ###-###-####
				Attention: Mark Gentile

SECTION 8.04. Certain Definitions.

(a) For purposes of this Agreement:

“Affiliate” of a specified Person means a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

“Business Day” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are authorized or required by Law to close in the City of Dallas, Texas.

“Code” means the United States Internal Revenue Code of 1986, as amended including any successor provisions and transition rules, whether or not codified.

“Closing Material Adverse Effect” shall mean that (i) Delta Airlines, Inc. shall have given the Company written notice of its intention to terminate substantially all of the engineering projects pending at the time of such notice, including a request for the return of the related deposits or (ii) United Airlines, Inc. shall have given the Company written notice of its intention to terminate substantially all of its business that it sends to the Company’s MRO services.

“Company Material Adverse Effect” means any event, circumstance, change or effect that is materially adverse to the business, financial condition or results of operations of the Company and its Subsidiaries taken as a whole provided that none of the following shall constitute or shall be considered in determining whether there has occurred a Company Material Adverse Effect;

(i) general economic conditions worldwide, in the United States, or in any nation or region in which the Company or any of its Subsidiaries has a substantial presence or operations;

(ii) any acts of terrorism not directed at the Company or any outbreak of war;

(iii) the public announcement by the Parties of this Agreement, the pendency of the Merger or the other transactions contemplated hereby, or any action taken which is required by this Agreement or specifically requested by TAS or its stockholders or consented to by TAS or its stockholders, in each case including losses of employees or any stockholder litigation arising from or relating to the Merger;

- 49 -

(iv) factors generally affecting the industries or markets in which the Company and its Subsidiaries operate;

(v) changes in Law not specifically directed at the Company or its Subsidiaries or generally accepted accounting principles or the interpretation thereof not specifically directed at the Company or its Subsidiaries;

(vi) any failure by the Company to meet any Company or published securities analyst estimates of revenues or earnings for any period ending on or after the date of this Agreement and prior to the Closing;

(vii) a decline in the trading price or change in trading volume of the Company Common Stock.

“Company Required Consents” means all consents, authorizations and approvals the failure to obtain in connection with the execution and delivery by the Company of this Agreement and the consummation of the Transactions by the Company, would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

“Control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise.

“Environmental Law” means any Law relating to: (A) the protection, investigation, remediation, or restoration of the environment or natural resources, (B) the handling, use, storage, treatment, disposal, release or threatened release of any hazardous substance, (C) noise, odor, pollution, contamination, land use, any injury or threat of injury to persons or property, or (D) the protection of the health and safety of employees or the public.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Knowledge of the Company” and the “Company’s Knowledge” and words of similar import means the actual knowledge (after due inquiry) of John Cawthron, Ron Utecht, Jim Tate, Kevin Carter or Elizabeth Mehaffey.

“TAS Material Adverse Effect” means any event, circumstance, change or effect that, individually or in the aggregate with all other events, circumstances, changes and effects, is or is reasonably likely to prevent or materially impede, interfere with, hinder, or delay the consummation by TAS of the transactions contemplated by this Agreement.

“Person” means an individual, corporation, partnership, limited partnership, limited liability company, person (including, without limitation, a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government.

“Representative” means, with respect to any Person, such the officers, directors, employees, accountants, auditors, attorneys, consultants, legal counsel, agents, investment bankers, financial

- 50 -

advisors and other representatives of such Person and of such Person’s anticipated sources of financing.

“Subsidiary” or “Subsidiaries” when used with respect to any party, shall mean any corporation or other organization, whether incorporated or unincorporated, at least a majority of the securities or other interests of which by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries, or by such party and one or more of its subsidiaries.

“Tax Returns” means in respect of any Tax, any return, declaration, report, election, estimate claim for refund or information return or other statement, form or disclosure filed or required to be filed with any Governmental Authority or taxing authority, including any schedule or attachment thereto, and including any amendment thereof.

“Tax” or “Taxes” shall mean (i) any and all federal, state, provincial, local, foreign and other taxes, assessments, fees, levies, duties, tariffs, customs, imposts and other governmental charges of any kind (together with any and all interest, penalties, assessments additions to tax and additional amounts imposed with respect thereto) imposed in connection therewith or by any Governmental Authority or taxing authority, including, without limitation: taxes or other charges on or with respect to income, capital gains franchise, windfall or other profits, gross receipts, real or personal property, sales, goods and services use, capital stock, branch payroll, employment, social security (or similar), workers’ compensation, utility, severance, production, occupation, premium, unemployment compensation or net worth’s-taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; license, registration and documentation fees; customs duties; tariffs and similar charges, (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period, or otherwise through operation of Law, and (iii) any liability for the payment of amounts described in clause (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other person.

(b) The following terms have the meaning set forth in the Sections set forth below:


Defined Term		Location of definition
90% Threshold		Section 5.04

Acquisition Proposal		Section 5.06(a)(i)

Action		Section 2.08

Adverse Recommendation Notice		Section 5.06(d)

Affiliate Transaction		Section 2.22(a)

Agreement		Preamble

- 51 -


Defined Term		Location of definition
Assignee		Section 5.02(c)

Certificate of Merger		Section 1.03

Certificates		Section 1.10(d)

Change in the Company Recommendation		Section 5.06(d)

CIT Debt		Recitals

CIT Financing Agreement		Section 6.02(d)

Closing		Section 1.02

Closing Date		Section 1.02

COBRA		Section 2.09(a)

Company		Recitals

Company Board		Recitals

Company Common Stock		Section 1.07(a)

Company Convertible Debt		Section 1.08(b)(v)

Company Disclosure Schedule		ARTICLE II

Company Permits		Section 2.15

Company Recommendation		Section 2.04(c)

Company SEC Reports		Section 2.06(a)(iv)

Company Software		Section 2.16(e)

Company Stock Option		Section 1.08(a)(ii)

Company Stock Plans		Section 1.08(a)(i)

Company Stock Purchase		Section 8.02

Company Stock Purchase Right		Section 1.08(b)(ii)

Company Stockholder Approval		Section 2.04

- 52 -


Defined Term		Location of definition
Company Termination Fee		Section 7.03(b)(i)

Competing Transaction		Section 5.06(f)

Conversion Agreement		Section 8.02

Copyrights		Section 2.16(e)

Costs		Section 5.07(a)

DGCL		Recitals

Dissenting Shares		Section 1.09(a)

Effective Time		Section 1.03

ERISA		Section 2.09(a)

Escrow Agent		Section 1.10(a)

Escrow Agreement		Section 1.10(a)

Expenses		Section 7.03(a)

GAAP		Section 2.06(b)

Governmental Authority		Section 2.05(b)

HIPAA		Section 2.09(b)

HSR Act		Section 2.05(b)

Indemnified Directors and Officers		Section 5.07(a)

Information Statement		Section 5.03(a)

Intellectual Property Rights		Section 2.16(e)

Law		Section 2.05(a)(ii)

LJH		Section 3.09

LJH Shares		Section 3.09

LJH Warrant		Section 1.08(b)(i)(B)

Material Contracts		Section 2.12(a)

- 53 -


Defined Term		Location of definition
Material Leased Real Property		Section 2.10(b)

Maximum Premium		Section 5.07(c)

Meeting Commencement Date		Section 5.01

Merger		Recitals

Monroe Debt		Recitals

Notice of Superior Proposal		Section 5.06(c)

Option Consideration		Section 1.08(b)

Order		Section 6.01(b)

Owl Creek Entities		Section 3.09

Owl Creek Shares		Section 3.09

Owned Real Property		Section 2.10(b)

Patents		Section 2.16(e)

Paying Agent		Section 1.10(b)

Per Share Merger Consideration		Section 1.07(a)

Plans		Section 2.09(a)

Post-Signing Returns		Section 4.03(a)

Proxy Statement		Section 5.03(a)

Proxy/Information Statement		Section 5.03(a)

Purchase Right Consideration		Section 1.08(b)(ii)

Real Property		Section 2.10(c)

Restructuring Agreement		Recitals

Sarbanes-Oxley Act		Section 2.06(c)

SEC		Section 1.10(b)

Securities Act		Section 2.05(b)

- 54 -


Defined Term		Location of definition
Shares		Section 1.07(a)

Special Committee		Recitals

Stockholders’ Meeting		Section 5.01(i)

Stock Conversion Price		Section 8.02

Superior Proposal		Section 5.06(g)

Surviving Corporation		Section 1.01

Surviving Corporation Shares		Section 1.07(c)

Takeover Provision		Section 5.10

TAS		Preamble

TAS Expenses		Section 7.03(b)(ii)

TAS Shares		Section 3.09

TAS Stockholders		Section 3.09

Term C Loan		Preamble

Termination Date		Section 7.01(c)

Trademarks		Section 2.16(e)

Transactions		Section 2.04(a)

SECTION 8.05. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.

SECTION 8.06. Entire Agreement; Assignment. This Agreement, including all exhibits, annexes and schedules hereto, and the Transaction Documents constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior

- 55 -

agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof.

SECTION 8.07. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than as provided in Section 7.03(b)(iv) and, following the Effective Time, Section 5.07 (which is intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons).

SECTION 8.08. Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at Law or equity.

SECTION 8.09. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State, without giving effect to any other choice of Law or conflict of Law provision or rule (whether of the State of Delaware or otherwise). The parties hereto hereby:

(a) submit to the exclusive jurisdiction of any such state or federal court sitting in the State of Delaware for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto; and

(b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the Transactions may not be enforced in or by any of the above-named courts.

SECTION 8.10. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT.

SECTION 8.11. Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

SECTION 8.12. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

SECTION 8.13. Interpretation. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of

- 56 -

reference only and shall be ignored in the construction or interpretation hereof. References to Articles and Sections are, unless otherwise indicated, references to Articles and Sections of this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. References to any statute are to that statute as amended from time to time, and to the rules and regulations promulgated thereunder, and, in each case, to any successor statute, rules or regulations thereto.

IN WITNESS WHEREOF, TAS and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

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		TAS HOLDING, INC.

		By:		/s/ John R. Cawthron

		Name:		John R. Cawthron

		Title:		President


		TIMCO AVIATION SERVICES, INC.

		By:		/s/ Ronald Utecht

		Name:		Ronald Utecht

		Title:		President

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